Ballmer Says Microsoft Not Immune from Global Crisis

OSLO (Reuters) – Microsoft (MSFT.O: Quote, Profile, Research, Stock Buzz)Chief Executive Steve Ballmer said on Tuesday the global financialcrisis will sap consumer and business spending, affecting allcompanies, including his own.

"Financial issues are going to affect both business spending andconsumer spending, and particularly … spending by the financialservices industry," Ballmer told reporters on the sidelines of a newsconference in the Norwegian capital.

"We have a lot of business with the corporate sector as well as withthe consumer sector and whatever happens economically will certainlyeffect itself on Microsoft," he told Reuters.

"I think one has to anticipate that no company is immune to these issues," he said, but declined to be more specific.

Wall Street analysts, on average, expect the Redmond,Washington-based company to generate an 8 percent rise in revenue tojust under $15 billion in its first-quarter ending in September.

"There are parts of our every business which are probably ‘safe’ inthe sense that it’s not like our business would go to zero," he said inan interview.

"On the other hand, when businesses have less money — they canborrow less money, they can spend less money — that can’t be good.When consumers feel the economic pinch, house prices come down. Thatcan’t be good," Ballmer said.

Microsoft shares rose 2.9 percent to $25.73 at 11:17 a.m. EDT in abroader U.S. market rebound following a sharp slide on Monday.

But Ballmer’s comments weighed on the shares of German software maker SAP AG (SAPG.DE: Quote, Profile, Research, Stock Buzz), which fell 2.0 percent and were among the heaviest fallers in Germany’s DAX index .GDAXI.

Investors may take Ballmer’s remarks as an indication thatMicrosoft’s revenues could be hurt by the continuing financial crisis,a trader said.

"By extension, these fears have worked their way over to SAP," the trader added.


Ballmer said he believed the U.S. Congress would soon help stabilizethe situation after rejecting a $700 billion bank bailout plan onMonday.

"I trust that before the end of the week we have some resolution, atleast in the U.S. Congress, that will help to stabilize the situation.We need that. I hope we get that," he said.

"I have to believe that some of the issues also face the Europeanbanks and I trust that the European Central Bank will be as intelligentas it needs to be around that," he said.

World stocks fell on Tuesday after the rejection of the U.S. bankrescue package, although European and U.S. markets later recovered.

Bad mortgage debt has hit U.S. banks and insurers, prompting government bailouts to avoid a breakdown in the financial system.


Ballmer said Microsoft plans to stick with charging handset makerslicensing fees for using its mobile operating system, despite freeofferings from Google (GOOG.O: Quote, Profile, Research, Stock Buzz) and Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz).

"We are doing well, we believe in the value of what we are doing," Ballmer told Reuters in an interview.

The pressure on Microsoft’s high licensing fees has increased over2008 with Google rolling out free Android technology and Nokia offeringto buy out others from Symbian and take also its software royalty-free.

He said there was no reason to expect Microsoft to enter the mobile phone making business, like some analysts forecast.

"I do not anticipate us building a phone," Ballmer said.

(Additional reporting by Wojciech Moskwa in Oslo and Tyler Sitte in Germany; editing by Paul Bolding, Elaine Hardcastle)