Microsoft: Company Structure, Ownership, People

Microsoft is a publicly owned company and its operations can be divided into seven segments: Client, Server and Tools, Information Worker, Microsoft Business Solutions, MSN, Mobile and Embedded Devices, and Home Entertainment.

Share Value

See: www.microsoft.com/msft/stock.mspx

Major Shareholders

Jarislowsky Fraser Limited Northstar Capital Management Pacific Crest Securities Wells Fargo Private Client Services John Hancock Technology Fund Peter Schroeder Victory Capital Management McAdams Wright Ragen

Employees

As of June 2003, the company employed approximately 55,000 people in 85 countries and regions. Of these, only 26% are female53. “None of the company's employees is subject to collective bargaining agreements,” declared Microsoft in 2001. Despite this, “the Company believes relations with its employees are excellent54.” In the early 90s, Microsoft admitted to the IRS that it had misclassified a number of employees as temp workers when they should have been cited as full-time workers. This led a group of temporary workers, angered over Microsoft's indefinite use of their services during the 90s, to file a class-action lawsuit against the company on the grounds that it was withholding full-time benefits and pay while working them like full-time employees. The dispute ended in 2002 with Microsoft agreeing to pay more than $97 million in damages and legal fees55. While Microsoft was required to change the way it managed its temporary employees, the lawsuit did not stop the company from continuing its dependence on contractors. According to the Washington Alliance of Technology Workers (WashTech), Microsoft still employs more than 3,000 contingent staffers in its domestic workforce who are the cogs in Microsoft’s software machine. Because the company wants to make the distinction between temps and full-time employees clear to the IRS and possible class action claimants, these contractors are given fewer benefits than their free-wheeling predecessors. They aren't allowed to use employee discounts for products they help to design. They aren’t invited to company parties. They don’t get promotional swag. A system of blue and orange badges makes sure full time Microsofties know who the ingroup is. To protect itself from claims that it is employing workers indefinitely with no benefits, the company introduced a policy that requires temporary workers to be terminated after 365 days of service at the company. Following a full year of service, contractors must wait 100 days before they can return for another assignment at Microsoft. This is generally paid for by the State of Washington.

Meanwhile, Microsoft is looking to India and its “two for the price of one” worker deals. Ability to hire and fire easily also plays a part. Contractors can be hired for "very short engagements," and it is simple to "add and subtract resources for ramp-ups and ramp-downs," said the senior Vice President for the Windows division, Brian Valentine. Having substantial Indian operations would allow the total work day to be extended to "16-18 hours," he added56.

Revenue

During 2003 revenue increased by $3.82 billion to $32.19 billion and net income was £9993 billion.57 However, some see it differently. Microsoft have been accused of fraudulent accounting and the creation of “financial pyramid schemes” in order to show profit58.

Board of Directors

William H Gates III (age 47), Chairman of the Board; Chief Software Architect. The world's richest man (net worth: $40.7 bn) and founder of Microsoft, Gates is about to get a little extra pocket change – about $100 million – from the company's first shareholder dividend. Gates owns around 1.1 billion of Microsoft's shares59. His wealth is divided between his much-hyped philanthropic persuits (see 'philanthropy') and Cascade Investments who've provided him with stakes in Corbis, Republic Services, Canadian National Railway, and Gabelli Asset Management.60 Gates is also a director for SeaMED Corporation, ICOS Corporation and Costco Wholesale Corp.61

Steven A Ballmer (age 47), Chief Executive Officer. Sixteenth in the list of the world's 400 richest people (net worth: $11.1 bn).62 Ballmer has been running Microsoft day-to-day since 1998 on a salary of $551,667 with $313,447 as a bonus.63 Recently announced a kinder, gentler company mission: "To enable people and businesses throughout the world to realize their full potential." One business grappling with Microsoft's potential is AOL. Following expensive promotional campaign, Web portal MSN.com claims it has converted 450,000 AOL customers. Ballmer is also a Director for Accenture Ltd. [[ Jon A. Shirley]] (age 65), President; Chief Operating Officer (retired). Came 368th in the list of the 400 richest people (net worth: $600 mil). Lives in Medina, Washington State. Most recent achievement: completing the 4-year construction of a 23,000-square-foot mansion/private museum. Costly ordeal: nearly $500,000 in building-violation fines, undisclosed settlement with irritated neighbours.64

James I. Cash Jr. (age 55)65 Formerly the James E. Robinson Professor at Harvard Business School and Chairman of Harvard Business School Publishing. Cash is also a director for Scientific-Atlanta, Inc., Chubb Corporation, General Electric Company, Winstar Communications, and Quest Resource Corp. (oil and gas operations). He is Senior Vice President, Audit and Risk Management for Community Bank Shares of India.

Ann McLaughlin Korologos (age 61)66 Has been a director of the Company since January 2000. Served as the United States Secretary of Labor from 1987 to 1989 and as President of the Federal City Council between 1990 and 1995. Korologos is also Senior Advisor with Benedetto, Gartland & Co., Inc., a private investment banking company. She is Vice Chairman of the Board of Trustees of RAND, a nonprofit institution that helps “improve” policy and decision making and a director for AMR Corporation (and its subsidiary, American Airlines), Fannie Mae, Harman International Industries, Inc., Host Marriott Corporation, Kellogg Company and Vulcan Materials Company.

• Wm. G. Reed Jr. (age 56)67 President and CEO at National Commerce Financial Co. where he's paid a salary of $365,000. As well as being a director for Microsoft, Reed is also a director for Convera Corporation and SAFECO Corp.

• Raymond V. Gilmartin (age 62)68

Chairman of the Board, President, Chief Executive Officer at Merck & Co. where he earns $1,483,334. He is also director at General Mills, Inc. and the Public Service Enterprise Group. Gilmartin serves on many lobby groups and pro-business groups. He is President of pharmaceutical industry lobbyists, the International Federation of Pharmaceutical Manufacturers Associations, and is on the Executive Committee for the Council on Competitiveness and Pharmaceutical Research and Manufacturers of America. He is also a member of the Business Council and the Business Roundtable.

• David F. Marquardt (age 54)69

Has served as a director of the Company since 1981. Marquardt is a founding general partner of August Capital, a venture capital firm formed in 1995, and has been a general partner of various Technology Venture Investors entities, which are private venture capital limited partnerships, since August 1980. He is a director of Netopia, Inc., Seagate Technology, Inc., Tumbleweed Communications Corp., and various privately held companies.

• Steven A. Ballmer
• James I. Cash Jr. Ph.D.
• Dina Dublon
• David F. Marquardt
• Charles H. Noski
• Jon A. Shirley

Subsidiaries

These include:

Below are what would be considered the most significant subsidiaries:

1. Microsoft Asia, Ltd. (Incorporated: Nevada, USA)
2. Microsoft Business Solutions ApS (Incorporated: Denmark)
3. Microsoft Capital Group, L.P. (Incorporated: Nevada, USA)
4. Microsoft E-Holdings, Inc. (Incorporated: Nevada, USA)
5. Microsoft Finance Company Limited (Incorporated: Ireland)
6. Microsoft Ireland Capital Limited (Incorporated: Ireland)
7. Microsoft Ireland Operations Limited (Incorporated: Ireland)
8. Microsoft Licensing, Inc. (Incorporated: Nevada, USA)
9. Microsoft Manufacturing B.V. (Incorporated: Netherlands)
10. Microsoft T-Holdings, Inc. (Incorporated: Nevada, USA)
11. MSLI, GP (Incorporated: Nevada, USA)
12. Round Island, LLC (Incorporated: Nevada, USA)
13. Round Island One Limited (Incorporated: Ireland)

References

53Microsoft Annual Report 2003. See: www.microsoft.com/presspass/inside_ms.asp. Viewed: 28.11.03 54Microsoft Annual Report 2001, p. 20 55'Caste Adrift at Microsoft,' Jannell Myers, 01.04.03, Computer Source Magazine. See: www.computersourcemag.com/articles/viewer.asp?a=780&print=yes. Viewed: 10.12.03 56'India figures high in MS dev outsourcing plans,' John Lettice, 25.02.03. See: www.theregister.co.uk/content/4/29473.html. Viewed: 16.12.03 57'Microsoft Annual Report 2003.' See: www.microsoft.com/msft/default.mspx. Viewed: 28.11.03. 58'Microsoft Financial Pyramid,' Bill Parish, 01.11.99. See: www.billparish.com/msftfraudfacts.html. Viewed: 19.12.03 59'Microsoft Lies, Scoble Style.' See: http://jeremy.zawodny.com/blog/archives/001094.html. Viewed: 28.11.03 60'World's Richest People,' Forbes, 2003. See: 61See: www.forbes.com/finance/mktguideapps/personinfo/FromPersonIdPersonTearsheet.jhtml?passedPersonId=223912. Viewed: 28.11.03 62'World's Richest People,' Forbes, 2003. See: www.forbes.com/finance/lists/10/2003/LIR.jhtml?passListId=10& passYear=2003&passListType=Person&uniqueId=ZBED&datatype=Person. Viewed: 28.11.03 63See: www.forbes.com/finance/mktguideapps/personinfo/FromMktGuideIdPersonTearsheet.jhtml?passedMktGuideId=28067. Viewed: 28.11.03 64'Forbes 400,' 2002. See: www.forbes.com/richlist2002/LIR28S5.html?passListId=54&passYear =2002&passListType=Person&uniqueId=28S5&datatype=Person. Viewed: 28.11.03 65See: www.forbes.com/finance/mktguideapps/personinfo/ FromMktGuideIdPersonTearsheet.jhtml?passedMktGuideId=186988. Viewed: 28.11.03 66See: www.forbes.com/finance/mktguideapps/personinfo/ FromMktGuideIdPersonTearsheet.jhtml?passedMktGuideId=118221. Viewed: 01.12.03 67See: www.forbes.com/finance/mktguideapps/personinfo/ FromMktGuideIdPersonTearsheet.jhtml?passedMktGuideId=28086. Viewed: 01.12.03 68See: www.forbes.com/finance/mktguideapps/personinfo/ FromMktGuideIdPersonTearsheet.jhtml?passedMktGuideId=184553. Viewed: 28.11.03 69See: www.forbes.com/finance/mktguideapps/personinfo/ FromMktGuideIdPersonTearsheet.jhtml?passedMktGuideId=28085. Viewed: 01.12.03