More immediate gratification came Thursday when Ballmer said that Microsoft would push down its operating-expense growth to be slightly slower than it was in 2006, easing pressure on margins and possibly allowing for more room at the bottom line for dividends. Ballmer said Microsoft would stay the course in both dividend payments and stock buybacks.
Still, there was talk of faster-growing rivals:
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were named. Microsoft seems to be using a Salesforce.com-like, on-demand, CRM product as an anchor for its business side. Reviews have been mixed to date, but Microsoft is using its close relationships with large companies to win over new users.
Speaking about the CRM potential, Ballmer said, "That's a product that I think is just a gem most people don't even think much about ... But again we're kind of No. 2 or 3 in trying harder; we're not the No. 1 guy in the market, which again I view as an upside opportunity."
Which got me wondering: Of the three rivals it's watching, one of them has a much smaller market cap than the others. Google, at $144 billion, is half Microsoft's size, while Apple, at $73 billion, is again half as big.
But Salesforce is valued at only $5.6 billion. That's less than what Microsoft spent on R&D last year. Microsoft has enough cash ($7 billion) to take over Salesforce at a 23% premium to its current value, which would take it from third place to first overnight in a key growth area.
Combining Salesforce's technology with Microsoft's client base would arguably help both companies. And it would cost $7 billion, a pittance for Microsoft. Remember, that's how much it cost shareholders when Ballmer opened his mouth last week.