Microsoft Shareholders Applaud Dividend, Question Share Price

Gathering for their annual shareholders meeting, about 1,200 shareholders overwhelmingly approved amendments to the stock dividend plan. But shortly after hearing Chairman Bill Gates and CEO Steve Ballmer give an upbeat analysis of the company's prospects in markets as varied as server operating systems and mobile consumer gear, some seized the opportunity to rebuke the executives.

"Why is the stock stuck?" asked one shareholder during a short, moderated question-and-answer session after the regular meeting. The question was greeted with muffled applause and quiet rumbles of approval.

Microsoft stock has performed modestly the recent years, trading well below 40 since 2001. It was trading at $29.67 on the Nasdaq at midday.

"We've been in a stagnant, narrow range for awhile," John Conners, chief financial officer, told shareholders. "Microsoft was overvalued going into it when the technology bubble burst. We've performed well since then."

Another shareholder, who identified himself as someone who owned 64,000 shares, seemed particularly uninspired by the famous management team.

"I'm excited about your enthusiasm, but you're talking to shareholders, not marketing, and you're not talking about shareholder value," he said. The speaker further decried what he called the "escalating legal expenses" and perceived tendency to resolve legal issues with monetary settlements.

That brought a quick response from Brad Smith, the firm's chief legal counsel, who recited nearly two years of legal victories from the U.S. District Court, the states Attorneys General, and settlements with AOL Time-Warner, Novell, and the Computer and Communications Industry Association. Resolving those disputes, he said, would lead to reduced legal costs.

As votes were being tallied for the stock plan, Gates and Ballmer told the shareholders to expect great things from Microsoft across a wide variety of areas.

Gates noted that over 100 million PCs had downloaded Windows XP Service Pack 2. He said it was "phenomenal" that so many machines were updated. He said Windows Server 2003 has surpassed Windows NT 4 and is on track to surpass all other server operating systems combined. He claimed the company had made huge progress in the war against spam, telling shareholders that the company-backed Sender-ID plan was gaining wide industry support.

For his part, Ballmer was bullish on year-over-year growth rates and upbeat on the prospects of monetizing a number of new technologies. In the field of Internet search engines, for instance, Ballmer said Microsoft would catch up to rivals such as Goggle. Regarding the many legal issues the company has fought over the years, Ballmer said the company has been "mending fences" with many competitors.