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Microsoft Ex-CEO Ballmer Wants More Transparency On Performance Of Cloud, Hardware Businesses

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Former Microsoft CEO Steve Ballmer said he thinks the software giant needs to be more forthcoming about how its cloud and hardware businesses are performing — including sharing profit and revenue figures.

“It’s sort of a key metric — if they talk about it as key to the company, they should report it,” Ballmer told Bloomberg at Microsoft’s annual meeting with shareholders Wednesday in Bellevue, Wash.

On Microsoft’s first quarter earnings call in October, CEO Satya Nadella said the software giant’s commercial cloud business was on an $8.2 billion annualized run rate, driven by strong sales of Office 365, Azure and CRM Online
Microsoft is also “making great progress” toward its goal of a $20 billion annualized cloud run rate by 2018, Nadella said at the time.

But Ballmer, who surpassed Bill Gates as Microsoft’s largest shareholder last year, apparently doesn’t believe these figures hold enough weight. “They should report the revenue, not the run rate,” he told Bloomberg.

Gates, for the past several years, has been selling a set amount of shares to fund the Bill and Melinda Gates Foundation’s philanthropy initiatives, and is on track to be fully divested sometime in 2018.

Microsoft partners told CRN they think Ballmer, who was Microsoft CEO for 14 years before Nadella was chosen to replace him in February 2014, is merely voicing an opinion that’s prevalent in the channel.

With Azure now viewed as the No. 2 public cloud after Amazon Web Services, and Office 365 sales continuing to grow at an impressive clip, many partners would like to see Microsoft touting its cloud success in a more granular way.

“I think more transparency in financials is a good thing,” Matt Scherocman, president of Interlink Cloud Advisors, a Cincinnati-based Microsoft partner, told CRN.

“Now that Ballmer is simply a shareholder, it seems completely logical that he would ask for additional transparency — particularly in an area that Microsoft has declared to be the most important part of the business,” said Chris Hertz, CEO of New Signature, a Washington, D.C.-based Microsoft partner.
Amazon Web Services, which launched in 2006, only began breaking out cloud revenue in April of this year. The Seattle-based public cloud giant reported revenue of $2.08 billion for its third quarter ended Sept. 30.

Alphabet, parent company of Google, still doesn’t break out cloud revenue for the Google Cloud Platform. This business is reported in Alphabet’s “Other Revenues” section, which grew 11 percent year over year, to $1.89 billion, during the company’s most recent quarter.

IBM doesn’t break out revenue for its Soft Layer cloud business either. On its third quarter earnings call in October, CFO Martin Schroeter said Soft Layer “grew strong double digits” during the period, and that IBM’s cloud business exited the third quarter on a $4.5 billion annualized run rate.

Microsoft partners told CRN the software giant has been pushing hard for the past couple of years to track how much cloud infrastructure and apps its customers are actually using, as opposed to what they’re purchasing as part of volume licensing agreements without actually deploying.

Partners see this as one of the main goals of the Microsoft FastTrack program, in which the software giant provides free email migration and other on boarding services for Office 365 and Enterprise Mobility Suite.

Microsoft, for its part, doesn’t seem overly concerned about Ballmer’s comments.

“We enjoy a regular dialogue with Steve, and welcome his input and feedback, as we do from our other investors,” Chris Suh, Microsoft’s general manager for investor relations,said in an emailed statement.

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