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Steve Ballmer Describes Tech’s “New Normal”

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Microsoft CEO Steve Ballmer is almost eternally optimistic and enthusiastic about the future, especially the future of his company — that, despite taking a pay cut this year due to the company’s poor financial performance in fiscal 2009.

So how does he keep his chin up with the economy still faltering and the world economy struggles to recover from the record recession?

Ballmer believes that the economic downturn was not a mere “correction” of world markets but a complete reset — what he likes to call “the new normal.”

That’s the primary theme in his latest “executive e-mail” to customers and the media, which Microsoft (NASDAQ: MSFT) released publicly Tuesday.

“I like this phrase because it speaks to the fact that economic reality has undergone a fundamental shift over the course of the past 12 months,” Ballmer said.

“After years of economic expansion fueled by unrealistic rates of consumption and unsustainable levels of private debt, the global economy has reset at a lower baseline level of activity. Today, people borrow less, save more, and spend with much greater caution.”

A lighter paycheck

He might say the same things about himself and his company. According to Microsoft’s latest proxy statement, filed Tuesday, Ballmer received $100,000 less in bonuses in fiscal 2009, which ended June 30, than he did in fiscal 2008.

That’s because in fiscal 2009, Microsoft reported revenue of $58.44 billion, a 3 percent drop from fiscal 2008 and the first year-over-year decline in the company’s history. The decline also triggered the first layoffs in Microsoft’s history.

Ballmer no longer receives stock awards, but as the company’s second largest stockholder, behind only chairman Bill Gates, he still holds some $10 billion in Microsoft stock so he’s not exactly hurting. His total compensation for 2009 came in at $1.27 million, down from $1.34 million in 2008.

Other senior Microsoft executives also saw their pay scaled back. CFO Chris Liddell, for instance, made $3.54 million in 2009, a decline from $4.8 million in 2008, while Stephen Elop, president of the Microsoft Business Division, actually saw his income increase by $800,000 to $4.8 million.

Two other senior executives didn’t fare as well. Robbie Bach, president of the Entertainment and Devices Division, saw his income fall from $8.3 million to $6.2 million, while COO Kevin Turner was the biggest loser with 2009 compensation of $5.4 million, down $3.2 million from $8.6 million in fiscal 2008.

Revamp the sales pitch

If Ballmer hopes to pump up revenues so as not to have another year like fiscal 2009, he’s got some hard selling to do.

That calls for a new strategy for business and particularly for IT — what he calls “the new efficiency.” In short, he said, “with less, do more.”

Actually, Ballmer admitted, it’s not a new strategy so much as a different perspective and rededication to principles that IT has embraced for years. Workers are more distributed and mobile, regulatory compliance is more challenging than ever, and security has become paramount.

“Today, a new generation of business solutions is transforming IT into a strategic asset that makes it possible to cut costs without crippling customer service or constraining workforce creativity and effectiveness,” Ballmer said.

“A new generation of business solutions is eliminating the barriers between systems and applications, and automating routine tasks so IT professionals can focus on high-value work that is aligned to strategic priorities. These technologies can help organizations reduce risk, improve security, and drive down support costs.”

It’s no surprise, then, that some of the key technologies he’s talking about happen to be Microsoft’s and they include products such as Windows 7 and Exchange 2010, both due out before year end — and the currently available Windows Server 2008 R2 and Hyper-V virtualization technology.

Ballmer also cited some new early adopter wins, including Ford and Continental Airlines, which he said expects to save more than $1.5 million annually in hardware, software, and operational costs.

“The new efficiency will not only help companies respond to today’s economic reality, it will lay the foundation for systems and solutions that connect people to information, applications, and to other people in new ways … This too will be the new normal — economic growth driven not by debt and consumption, but by rising productivity and new ideas that provide real value to people throughout their lives,” Ballmer’s e-mail concluded.

Article courtesy of

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