Ballmer: Microsoft Not Immune to Financial Crisis

By  |  Tuesday, September 30, 2008 at 1:30 pm

These probably were not the type of questions Steve Ballmer was expecting to answer. At a stop in Oslo to talk about Microsoft’s acquisition of Norwegian-based Fast Search, reporters seemed more interested in any possible ramifications for the world’s largest software company due to the ongoing financial crisis.

Ballmer warned that as the financial crisis deepens, businesses and consumers alike will further cut spending. Obviously, the worst effects would be across the financial services industry, hit the hardest by the current crisis.

“We have a lot of business with the corporate sector as well as with the consumer sector and whatever happens economically will certainly effect itself on Microsoft,” he told Reuters in an interview. “I think one has to anticipate that no company is immune to these issues.”

Those statements add to comments last week where he said in rather general terms that hardware and software sales would suffer. These are a bit more alarmist and sure to get the attention of already skittish investors.

It also furthers comments made by general counsel Brad Smith, which appeared on Microsoft’s press site Monday following the House’s rejection of the proposed bailout:

“Microsoft strongly urges members of the U.S. House of Representatives to reconsider and to support legislation that will re-instill confidence and stability in the financial markets. This legislation is vitally important to the health and preservation of jobs in all sectors of the economy of Washington State and the nation, and we urge Congress to act swiftly.”

Microsoft should not see significant declines as it’s customer base is quite diverse, but it still seems to have Ballmer worried. Simply put, the less businesses can borrow as the availability of credit shrinks, the less they will be willing to spend.

Like the rest of Wall Street, the Microsoft CEO has faith that Congress will act soon, and believed some resolution would come by the end of the week. It is this optimism which is likely causing the “snapback rally” today in the markets, which are up about 4 percent or so across the board after losing double that Monday.

I think most people agree that Congress does need to act. We may not necessarily agree 100% on a taxpayer-funded bailout of these guys who made mistakes giving loans out flippantly, but credit still needs to flow. Ballmer’s on the right track here. Doing nothing is an option that I do not think is on the table right now.

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