Microsoft put on a 10-hour version of its "the best is yet to come" commercials for Wall Street this week.
Nothing seemed to dampen the spirits of Microsoft executives at Thursday's Financial Analysts Conference. They bragged about strong earnings, expressed confidence the government's antitrust case would be thrown out on appeal, pointed to ever-increasing employee rolls, and even dismissed a recent exodus of top executives as what President and CEO Steve Ballmer called "cleansing and cathartic."
"These guys are all sunshine today, but the reality is they're facing a lot of challenges," said one Wall Street analyst who, in light of Redmond, Wash.-based Microsoft's "no comment" policy at the event, requested anonymity. "There is a compelling antitrust argument against them, fiscal growth was slower last [fiscal] year, and .NET is far away from fruition."
"Exuding confidence is one of the things Microsoft does best," the analyst said. "Some of that comes from being supremely confident, and some of that comes from knowing that you always, always have to put your best face forward in public."
Microsoft Chief Financial Officer John Connors told the assembled analysts that the company's .NET initiative, which, with its "software as a service" focus, is causing the company to remake itself yet again, will not throw its finances into disarray.
Connors pointed to upgrades to Exchange, SQL Server, and other server products that are due later this year and in early 2001. Those products have been relabeled ".NET servers" since the initiative was unveiled last month. Also, the first .NET-centric version of Microsoft's development tools, Visual Studio.NET, is expected to ship next year.
The strategy will open new market opportunities, such as increased sales of mobile devices and related software, Connors stressed, and he said Microsoft did not expect to see its revenues hurt by the transition to a model that sees software sold over the Internet on a subscription basis.
However, "there will be a continuance and extension of existing franchises," Connors added.
"We do not see a cliff; we do not see a hiccup," Connors stated. "We see an opportunity to grow our business."
Chief Operating Officer Bob Herbold tried to reassure Wall Street that the company will prevail in its antitrust case. Last month, U.S. District Court Judge Thomas Penfield Jackson ordered that Microsoft be broken into two companies as a remedy for its being found guilty of antitrust violations.
Microsoft last week asked the Supreme Court to send the case back to the Court of Appeals in Washington. Herbold said that after the U.S. Department of Justice responds to that filing, the Supreme Court likely will decide in September or October which court will hear the appeal.
"It doesn't make a lot of difference to us which court it goes to," Herbold said on Thursday. "We think the Court of Appeals is more appropriate from a mechanical point of view, ... but on the other hand, we are confident enough in this case that from the standpoint of either of the courts, we have an excellent case to make."