Ballmer Chides Microsoft Over Cloud Revenue Disclosures

  • Former CEO says company also should provide hardware metrics
  • Ballmer comments at Microsoft's annual shareholder meeting

One major Microsoft Corp. investor wasn’t happy with the level of disclosure Wednesday at the company’s annual shareholder meeting: Steve Ballmer.

The company should disclose profit margins and sales for its cloud and hardware businesses, Microsoft’s former chief executive officer said.

“It’s sort of a key metric -- if they talk about it as key to the company, they should report it,” Ballmer, who is the company’s biggest individual shareholder, told Bloomberg at the software maker’s annual meeting in Bellevue, Washington.

Microsoft reports an annualized revenue run rate -- or sales at a certain point in time carried out to a yearly rate -- for its commercial cloud business and has said it is aiming to reach $20 billion on that basis by 2018. Ballmer, who handed the reins to Satya Nadella in 2014, derided the use of run rate as “bulls---.”

“They should report the revenue, not the run rate,” he said. Margin -- a measure of profitability -- is important because while gross margins for software are very high, they are far lower for things like hardware and cloud services, Ballmer said.

Microsoft also said in April it would end its fiscal year with a commercial cloud gross margin of 44 percent. Though it reports revenue and margin for some of its cloud businesses, it doesn’t provide a total sales number for cloud.

No Clue

Ballmer said he has discussed the issue with the company and that after almost two years out of the CEO job, he can’t even guess what these numbers are.

“We enjoy a regular dialogue with Steve, and welcome his input and feedback, as we do from our other investors.” said Chris Suh, Microsoft’s general manager for investor relations.

Ballmer also criticized Nadella’s answer to an audience member questioning the lack of key apps, like one for Starbucks, on the company’s Windows Phone. Nadella responded by citing the company’s plan to appeal to Windows developers by allowing them to write universal applications that work on computers, phones and tablets, targeting a larger array of devices than just Microsoft’s handsets that have just a single-digit share of the mobile market.

“That won’t work,” Ballmer commented as Nadella spoke. Instead, the company needs to enable Windows Phones “to run Android apps,” he said.

Microsoft in April announced a plan to let developers easily rework Android apps for Windows, as well as those from Apple Inc.’s iOS. Earlier this month, the Verge reported the Android project, code named Astoria, has been put on hold.

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