It'd be easy, I think, for investors to get the wrong takeaway from reports of Microsoft (MSFT:Nasdaq - news - boards) CEO Steve Ballmer's memo to the troops last week. (See Adrienne Sanders' story on TheStreet.com.)

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Ballmer laid it out pretty clearly that Microsoft intends to stop wasteful spending -- that is, spending he and Chairman Bill Gates think is wasteful -- and maybe more importantly, to refocus the company on fewer but bigger-payoff products.

I thought that was pretty clear, and found the memo generally encouraging -- nothing revolutionary, nothing surprising, but about what I'd think Microsoft investors would want their boss man to say in the circumstances. But then I started running into media coverage of the memo which made it sound like the last words of a dying company.

Nonsense. Whatever you think of Microsoft as a buy or short at current levels, and whatever you think will happen on the Linux-Windows front, or the PC-sales front, or the mobile-devices front, Microsoft hardly has its back up against the wall. With $25 billion in the bank, Microsoft has the time and cash to remake itself into pretty much whatever it wants.

Which is really the point of the memo, to paraphrase:

We can be whatever we want, but we have to decide what that is, then put our dollars on that bet, not elsewhere.

"We do not have the financial resources," Ballmer wrote, "or the people or the interest in doing things that are not consistent with our priorities." Microsoft must, he said, no longer "invest resources in technologies where customers no longer benefit much from our innovation."

Exactly.

Some who saw reports of the memo may have stumbled on one phrase. Ballmer urged 'Softees to return to "the kind of cost-conscious culture that marked Microsoft's earlier years." With the typical software-business's reputation for profligacy -- all those free Jolt colas and fruit juices, plus flashy new product rollouts -- Microsoft has an entirely unjustified reputation as a big-spending wastrel.

In fact, it's just the opposite. People who know the company best know it's been cheap to the bone.

One of the best true stories about Bill Gates' own penny-pinching approach recalls the time a co-worker in the executive suite asked him to please get a second secretary. "Are you kidding?" Bill exploded. "Who do you think I am? The Queen of England?"

Seems to me Ballmer's memo was right on the button. And not coming from weakness, but from strength. As an investor, that's the attitude I want to see in the people who are the (temporary) custodians of my money.

More on Microsoft: Another executive departure -- or at minimum, a profound change in assignment -- comes with the sort of departure of longtime Microsoft heavy Joachim Kempin, according to the Wall Street Journal.

The Journal says at midyear Kempin will become a "special projects" consultant for Ballmer. Uh-huh. Sure.

As the company's chief negotiator with original equipment manufacturers on license terms for Windows, Kempin earned a reputation on both sides of the table as a bare-knuckle fighter, who went for every last dime on the table ... if not every last throat at the table.

My favorite Joachim Kempin story -- everyone in the business has a favorite Joachim Kempin story -- was recounted in CNet's story this week on his reassignment: "Kempin has been a problem child for Microsoft for years. This is a guy who lost his hunting license earlier this year for allegedly using his SUV as a weapon (as in ramming antelopes with his car instead of shooting them)."

Nuff said.

One more: Word has leaked that Ballmer quietly approached Oracle (ORCL:Nasdaq - news - boards) CEO and long-time chief Microsoft-baiter Larry Ellison about a meeting to discuss, among other things, product compatibility. The meeting resulting from those contacts apparently took place this month, with Ballmer flying down to Oracle's glass-box farm south of San Francisco.

Oracle's big-selling 8i database program runs fine on Windows NT, and is widely used on that operating system. But it has yet to be certified, by Microsoft, for Windows 2000. Oracle has amazing leverage here, because Windows 2000 is just not going to get the corporate adoption rate Microsoft needs for it if it cannot interoperate reliably with the Oracle product.

Oh, to have been a fly on that wall!

Finally, I said late last week that if, after its warning, Microsoft hit 50 on the way down, I expected to see pile-on buying, and a resulting bounce back up. Obviously that didn't happen: In today's massacre, Microsoft's dancing around 42.

Without the general market collapse, I think MSFT would have bottomed somewhere in the area of 50. And yes, I still think it's a buy, though I'd wait for the current noise to quiet down a little before starting a new position, or adding to an existing one in the stock.

I said on a RealMoney.com chat Tuesday that Microsoft is pretty clearly never again going to be the "old Microsoft" we knew -- dominant, omnipotent, a huge earnings machine.