Updated from 5:22 p.m. EDT Microsoft ( MSFT) plans to save nearly $1 billion this year by slashing costs and operating more efficiently, but the software behemoth also acknowledges it needs to boost both top- and bottom-line growth to breathe life back into its stock. That was part of the message that Microsoft CEO Steve Ballmer relayed Tuesday to the company's 57,000 employees in an annual letter, which also addressed the difficult balance the company must strike between its enormous size and its need to innovate. The letter comes as investors have been speculating about what the world's largest software maker plans to do with its cash hoard, now sitting at a mind-boggling $56 billion. Microsoft has said it will address the issue by its July 29 analyst day, although some have speculated the company could announce something earlier as part of its fourth-quarter earnings report on July 22. Addressing questions from employees about why Microsoft doesn't use that cash to save recently cut employee prescription drug benefits, Ballmer wrote: "Using the cash reduces profits, which reduces the stock price. The cash is shareholders' money, so we need to either invest in new opportunities or return it to them." Goldman Sachs analyst Rick Sherlund took that statement as evidence of senior management's recognition that the company needs to address its cash position. On Wednesday, he reiterated a belief that the company can support a $40 billion stock-buyback program, which would add 9 cents to 10 cents of earnings per share. But the analyst also suggested Ballmer and Chairman Bill Gates may end up taking a more conservative path. (Sherlund has an outperform rating on Microsoft, and his firm has done banking with the company.) Shares of Microsoft have climbed nearly 10% in the past three months as investors have started pricing in upcoming action from the company on its cash balance. But Microsoft's stock hasn't been able to break the $30 mark since last October. Shares recently fell 37 cents, or 1.3%, to $27.73 in after-hours trading Wednesday; shares closed up 8 cents, or 0.3%, at $28.10 in the regular trading session. Still, Ballmer expressed optimism about boosting the share price.