Marco della Cava, USA TODAY
SAN FRANCISCO — While Microsoft's annual shareholder meeting Wednesday was largely a platform for executives to repeat the company's mobile- and cloud-first mantra, the lengthy question and answer session that followed dove into the thorny topics of racism and ageism.
Leading off the questions at Microsoft's campus in Redmond, Wash., was Rev. Jesse Jackson, whose Rainbow PUSH coalition has been hammering tech companies for years about the lack of diversity in their workforce ranks.
After congratulating CEO Satya Nadella on the pending appointment of two new female board members — Johnson & Johnson's Sandra Peterson and former Cisco CTO Padmasree Warrior — he pushed the company to "add black and Latino members next," because "Microsoft can lead." Microsoft's board chairman John Thompson is African-American. He and Nadella met privately with Jackson on Tuesday.
"It's not just about words, it's robust action and having a rich dialog about having a culture of inclusiveness," agreed Nadella during the meeting, which was webcast. He noted that it had run 100,000 employees through new unconscious bias training.
Referring to the private conversation he had with the civil rights leader earlier, Nadella said he would look into new areas suggested by Jackson, specifically ethnic representation in advertising as well as allocation of more corporate resources to reach those in the inner city.
In September, Nadella announced Microsoft would spend $75 million over the next three years to get kids interested in technology through the TEALS program, Technology Education and Literacy in Schools. On a more disappointing note, the company released employee diversity numbers last week that indicated its racial and gender make-up remains essentially unchanged — mostly white and male, echoing most other tech companies — with a notable drop in female employees as a result of its Nokia layoffs.
That said, Jackson is optimistic that Microsoft under Nadella will continue to remake itself to reflect the demographics of its consumer base.
"They're taking more and more leadership on this issue, and at least it's all in clear view, they're not avoiding the subject," Jackson told USA TODAY after the meeting adjourned. He said he was impressed that the four executives on stage at the meeting included one African-American (Thompson), one female (CFO Amy Hood), one Asian (Nadella) and one white (president Brad Smith).
"They're measuring their progress, and we'll continue to do the same," Jackson said.
Microsoft's stock (MSFT) has made progress over the calendar year as well, starting at $48, dropping a few times to a low of $40 and currently flirting with $55, giving the company a market cap of $438 billion, third among public tech companies behind Alphabet (formerly Google, $527 billion) and top-seed Apple ($654 billion).
Rev. Jesse Jackson, at microphone, addresses top Microsoft executives at the company's annual shareholder's meeting Wednesday in Redmond, Wash. (Photo: Butch Wing, Rainbow PUSH)
The shareholders who followed Jackson touched on a range of topics, from why Microsoft had cut a particular program that compensated college students for being product-advocates on campus to borderline tech-help questions about how to use a smartphone to access television content.
One particularly tense exchange was between a Chinese-American shareholder who started by asking why there weren't any Chinese board members but concluded by called Smith a "hoodlum" for allegedly asking Microsoft campus police to ban her from the premises after she tried to visit the company's executives.
Smith responded that he would take the issue under advisement and quickly moved on to an older man who asked what Microsoft planned to do about the ageist nature of its brand image and products.
"I see a lot of grey hairs here (at the meeting), but not many in your commercials," he said. "Are you dealing with this, besides sexism and racism? Are there any games for people 50-plus (age group)?"
Nadella's response: "Well, I'm close to 50 (he's 48), and I love (the video game) Halo." The questioner immediately countered: "You gotta appeal to us longer-livers."
Nadella allowed then that "this is a very important topic, we have people of all ages at Microsoft. But when I look at product design, the most important thing is that it's universal, and not geared to one population or another."
The beginning of the meeting featured presentations by key leadership members. Thompson noted that Microsoft's three-fold mission is to "reinvent business productivity, grow the intelligent cloud and encourage more personal computing." Hood reiterated the company's goal of having its new Windows 10 operating system on 1 billion devices by 2018, and reaching $20 billion for its annualized cloud revenue run rate by the same year (it was $8.2 billion this year). She also highlighted search engine Bing hitting 20% market share last summer, placing it second to Google (64%) and ahead of Yahoo (12%). Bing and Yahoo's 2009 search alliance means combined they own 32% of search.
And Nadella once again hit on his personal mission of driving a cultural transformation at the storied tech company, which was once known under founderBill Gates and former CEO Steve Ballmer as an imperious monolith.
"Our culture is a leading indicator of our future success," said Nadella, who has implemented hackathons and encouraged bottom-up idea-generation competitions. "It's about having a growth mindset. We've gone from being a group that knows it all, to a group that wants to learn it all."
No telling what Gates, who was seated in the front row with the other board members, thought of that old-Microsoft characterization.
In a note prior to the shareholder meeting, FBR Capital Markets analyst Daniel Ives praised the company's trajectory in 2015, adding that "we believe the stage is set for a 'renaissance of growth' to return to Redmond, with a focus on strong secular areas (e.g., cloud) putting fuel in the growth engine."
In his pre-meeting summary, Bernstein analyst Mark Moerdler said: "We believe that Microsoft, driven by its new management team, is aggressively transforming to a mobile- and cloud-centric company in which the migration to subscription and cloud will drive re-acceleration in revenue and EPS growth."
Referring to Nadella's bold write-down of its Nokia purchase, he added that "the new management team is streamlining the company to be more efficient, which will improve margins beyond historical levels, even when accounting for the Nokia acquisition. Lastly, we expect management to continue increasing the return of capital to shareholders."