Philosopher CFO?By Reuters - | Posted 2008-02-08 Print
Microsoft's decision in 2005 to hire Chris Liddell, a New Zealander working in the paper industry, to fill the company's open job of chief financial officer seemed like an odd choice.
In the weeks leading up to Microsoft's offer for Yahoo, Songhurst's team would come to work on Sunday mornings for "church with Liddell," planning sessions that would stretch deep into the night.
At those sessions, Liddell probed Yahoo's financials, checking and double-checking whether Microsoft's projection for $1 billion in cost savings from a potential Yahoo merger is realistic and achievable.
Liddell would grill Microsoft's own M&A team about its logic for doing the Yahoo deal, a style of debate that stems from his days studying for his masters degree in philosophy from Oxford University.
"The questions never stop," said Songhurst. "His method is very Socratic. It's about arguing things out. It's about getting to the best possible intellectual answer."
Since Liddell's arrival at Microsoft in May 2005, the company has tripled the rate of acquisitions, ranging from small technology firms with a few employees to last year's $6 billion purchase of digital advertising firm aQuantive.
"I am happy to use our capital strength to drive growth as much as possible," also wrote Liddell by e-mail.
A former investment banker with Credit Suisse First Boston, Liddell keeps close tabs on the market's view of Microsoft and has pushed Microsoft to be more responsive to ideas from outside the company.
A former Microsoft employee who asked not to be identified said Liddell pushed the company to solicit pitches from investment bankers instead of relying mostly on its own ideas.
He is one of a handful of top-level executives brought in by Microsoft in recent years to bring outside blood into the company. The list includes Chief Operating Officer Kevin Turner, a former Wal-Mart executive, and Ray Ozzie, who replaced Bill Gates as the company's chief software architect.
Liddell, who still plays touch rugby with Microsoft employees during lunch, has also pushed for the company's aggressive campus expansion in the Seattle area.
Adding more offices, parking spots and other amenities is part of a broader push by Liddell and other senior executives to keep Microsoft workers happier. Those types of expenses rarely make Wall Street happy, but Liddell views staff retention as a priority, especially with Google Inc and Yahoo opening new offices in the Seattle area.
Over the years, Microsoft investors have complained that the company was too conservative, leaving billions of dollars in cash sitting on its balance sheet.
In 2004, Liddell's predecessor, John Connors, issued a one-time $32 billion dividend to investors after the company's cash position reached a staggering $64 billion.
As of the most recent quarter, Liddell has cut the cash pile to $21 billion -- roughly the cash portion of Microsoft's offer for Yahoo. It has spent $54 billion in the last two fiscal years on share buybacks and dividends.
"This is a company that had $70 billion in cash laying around a couple years ago so it speaks volumes to how much the company has moved the capital structure toward something more efficient," said Bernstein Research analyst Charles Di Bona.
"It's a certain level of maturity within the management team in changing how you need to behave sometimes."
(Editing by Phil Berlowitz)
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