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Maybe Microsoft should move its shareholders meeting to the carefree days of summer, when the sun shines warmly and spirits soar — and momentous corporate events do not occur.
For whatever reason, the company's annual meeting seems to closely follow significant happenings at Microsoft. Yesterday's gathering, at Meydenbauer Center in Bellevue, was no exception.

At last year's meeting, Microsoft's settlement with the Department of Justice was hot news. In 1999, the company was reeling from a devastating court ruling, while the year before that the company was in the middle of a grueling antitrust trial. In 1997, the company had just been targeted by the federal government and by consumer advocate Ralph Nader.

As a result, Microsoft executives aren't the only ones onstage at shareholder meetings. The specter of current events is there as well — a daunting presence at times.

Yesterday, however, recent news gave shareholders reason to celebrate.

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Although other frequently discussed subjects such as dividends came up, the 800-pound gorilla in the room was a court ruling Friday in which a federal judge approved the company's antitrust settlement with the Justice Department and nine states while rejecting harsher penalties sought by nine other states and the District of Columbia.

Although Microsoft still faces other antitrust suits, the legal wrangling with the federal government and the states had been a drag on the company for years.

If the decision is not appealed, the ruling likely brings to a close one of the most vitriolic antitrust cases fought in decades.

That was good news for Microsoft shareholders, many of whom arrived early yesterday and had coffee and pastries before the 8 a.m. meeting. Their enthusiasm was evident at a makeshift company store, where Microsoft golf balls, coffee mugs and polo shirts were snapped up quickly.

Microsoft executives spent little time discussing Friday's ruling with the 1,500 shareholders in attendance. Chief Executive Steve Ballmer described the decision as "a fair resolution of what has been a lengthy case."

The company is committed to being "a new kind of industry leader," he said, one that recognizes the need for responsible leadership.
Chairman Bill Gates said the ruling "provides clarity" for the company, and added that Microsoft is committed to the terms of the settlement.

Shareholders approved Microsoft's employee stock-purchase plan and voted for the company's eight-member board to serve another one-year term. They rejected, for the third year in a row, a shareholder proposal to enforce labor and humanitarian standards in China.

Also rejected was a shareholder proposal to ensure that no more than 25 percent of the fees paid to Microsoft's auditor will be for non-auditing purposes. Microsoft said both shareholder proposals were unnecessary.

Ballmer, Gates and chief financial officer John Connors updated shareholders on Microsoft's initiatives and business plans. Ballmer praised the recently released MSN 8 Internet service but said the company has a "long, hard road to go" with the Xbox video-game console.

"In the short run, we've got a lot of work to do and a lot of investment to make" with the Xbox, he said.

Gates gave more of a big-picture overview of Microsoft's products and potential. He said the new Windows XP Media Center shows that the personal computer can be the device at the center of the living room.

Gates also said that the Tablet PC, which goes on sale this week, "is a good example of the kind of expansion that hardware and software advances, coordinated together, can bring."

During the question-and-answer period, Connors shot down the hope of shareholder dividends, as he did last week at a downtown Seattle stock-analyst conference. Microsoft had $40.5 billion in cash on hand at the end of September.

While Friday's ruling was positive, he said, the company still has "significant legal issues" that must be cleared up before any dividends are distributed.

Shareholder Meredith Pool of Preston said she agreed with the dividends policy.

"I think they're doing the right thing to keep the cash within the company available," she said.

Friday's ruling seemed to be of more importance to many shareholders. John Ruiz of Renton said the ruling allows Microsoft employees to refocus on the company's business.

"Their hands are untied, you might say," he said. "They can concentrate on putting out a better product for customers."

Peter Saunders of Bellevue said company executives seemed upbeat, and are learning to "avoid some of the pitfalls that got them into some of the legal problems."

"I think things are going to improve dramatically for Microsoft," he said. Kim Peterson