Ballmer: "Big, Bold Bet" Needed To Beat Google - InformationWeek

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Ballmer: "Big, Bold Bet" Needed To Beat Google

Microsoft CEO Steve Ballmer tries to rally the company's employees in an email that defends the company's investment strategy -- and that mentions Google by name as the driving force behind projects such as its nascent online-advertising network.

In an internal memo, Microsoft chief executive Steve Ballmer defended company spending plans that have sent its stock price tumbling by 12 percent since Thursday.

"Throughout our history, Microsoft has won by making big, bold bets," Ballmer wrote to employees in an e-mail obtained by several newspapers, including the Seattle Post-Intelligencer, which ran excerpts on its Web site.

"I believe that now is not the time to scale back the scope of our ambition or the scale of our investment," Ballmer continued. "While our opportunities are greater than ever, we also face new competitors, faster-moving markets and new customer demands."

On Thursday, when Microsoft released its third-quarter results and discussed upcoming investments, analysts noted a $2.4 billion discrepancy in 2007 spending from what they had earlier estimated. Microsoft said there was no "smoking gun," but acknowledged it was ramping up spending across the board.

In his memo, Ballmer was more specific, and spelled out larger investments in its Xbox game console, the upcoming Windows Vista and Office 2007 lines, and new online efforts.

He also pointedly named Google as the reason behind some of the spending. "Further development of adCenter is key -- our goal is to create the Web's largest advertising network, giving us an engine that will enable us to monetize our services and compete against Google."

adCenter, which is expected to launch this summer, is Microsoft's response to Google's AdWords, the search giant's multi-billion dollar online advertising platform.

Ballmer also promised workers that the stock price drop was "a lesson that the entire leadership team will learn from."

The leaked memo didn't stem the fall of the Redmond, Wash. developer's stock, however. Through mid-day Tuesday, prices fell an additional $.22, to $24.07.

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