| BUSINESSWEEK ONLINE : JULY 12, 1999 ISSUE | ||||||||
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| INTERNATIONAL -- INT'L COVER STORY
Microsoft's Herbold: "We Don't Take Anything for Granted Here" (int'l edition) Microsoft Corp.'s rise to the top of Business Week's Global 1000 has been impressive. With a market cap of more than $400 billion, some market watchers have pondered if the software kingpin might become the first trillion-dollar corporation. While William Gates III and Steve Ballmer catch the majority of the spotlight, but a key figure behind the scenes at Microsoft is Robert Herbold, chief operating officer and executive vice-president. Herbold left Procter & Gamble in 1994 to join Microsoft as its COO and has responsibility for everything from public relations and human resources to information systems and manufacturing. Business Week Silicon Valley Correspondent Michael Moeller recently caught up with Herbold via an E-mail interview to get some insights into Microsoft's amazing ride. Q: To what do you attribute Microsoft's incredible success this year? A: The year is not quite over yet, but it has been a very good year for Microsoft. We've had strong performance across the product lines due to the popularity of leading products such as Office 97, Windows 98, Windows NT Workstation, Windows NT, and our server applications. Q: What do you think you should have done better? A: Our execution in our online Internet businesses could have been more decisive and timely, but we're off to a good start and very optimistic about the promise of this area. Q: What is the outlook in the coming year? A: We are just now wrapping up our annual planning cycle, so we'll have a clearer picture on that soon. Generally, we are enthusiastic about the next 12 months because of two important products that will play a key role in our business -- Office 2000, which we just released, and Windows 2000, which will be coming out this fiscal year. We are also cautious given the uncertainties of Y2K and what that might mean regarding customer buying behavior. Q: What are the top hurdles/risks that Microsoft faces that might keep the amazing growth of the past from being duplicated? A: We have offered guidance for several years suggesting it is unlikely that Microsoft will be able to deliver the types of growth rates going forward that we have in the past. And our growth rates are actually coming down. Looking back, fiscal 1996 revenue grew 46%, while fiscal 1997 revenue grew 31%, and in fiscal 1998, revenue grew 26%. So while total revenues have continued to increase on an absolute basis, the growth rates have come down. Q: What will Microsoft have to acomplish to keep things going well? A: We will have to do an excellent job of developing top-notch software and other products and services that deliver on customer needs. Microsoft faces formidable competitors in virtually all segments of the software industry in which we compete. We also have a growing customer base that won't upgrade unless we deliver the kinds of innovative features and services they require. Q: Are you amazed that the finanical performance of Microsoft -- or has this type of growth and success becoming commonplace and expected? A: While we are highly pleased with the financial performance of the company, these kinds of results certainly have not become commonplace. In recent months, we've reworked our company-wide vision and realigned our business units to focus on key customer segments rather than specific product lines. The goal is to deliver broad customer solutions and further empower our business leaders to execute on several fronts simultaneously. We don't take anything for granted here. Q: Why do you think Microsoft is so attractive to investors these days? A: You'd have to ask our investors that question. Strong financial performance, up-front and clear financial guidance, a strong belief in the management of the company, and the quality and technical excellence of our products are certainly key factors they've told us about. Q: Do you think that Wall Street's expectations are too high? A: We have a number of very smart, focused analysts who work hard to understand the company. We are comfortable with the expectations that Wall Street currently has for Microsoft. Q: Can Microsoft become the first company with a trillion-dollar market cap? A: Nobody knows! Importantly, we approach our business from the perspective of developing product capabilities and business solutions that customers say are important. If we do well, the marketplace will reward us. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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