Microsoft's hiring of New Zealander Chris Liddell as chief financial officer was front page news in his home country. One paper even dubbed...
Microsoft’s hiring of New Zealander Chris Liddell as chief financial officer was front page news in his home country.
One paper even dubbed him Microsoft’s Matamata Money Man, playing up his roots in Matamata, a pastoral farm town used as the set of Hobbiton in the “Lord of the Rings” movies.
If Liddell can help resuscitate Microsoft’s hobbled stock, he may be front page news in the U.S. as well. Already the stock is showing signs of life after company execs aggressively pitched growth prospects to Wall Street analysts last month.
But that’s only part of Liddell’s job as head of Microsoft’s 2,100-person finance group. He’s also continuing the cost-cutting program started by his predecessor, John Connors, while stepping up the pace of acquisitions.
Liddell, 47, was born in Matamata where his father was a schoolteacher, but he grew up just outside Auckland. He studied engineering but early in his career he became an investment banker and managing director at Credit Suisse First Boston’s New Zealand group.
Later he became chief financial officer and then chief executive officer at Carter Holt Harvey, a forest products company that’s one of New Zealand’s largest companies. In 2003 he moved to Connecticut to become CFO of International Paper, Carter Holt’s parent, but he continues to be a New Zealand citizen working here with a green card.
Microsoft senior vice president and chief financial officer
Birthplace: Matamata, New Zealand
Education: University of Auckland; master’s from Oxford
Family: He and wife Bridget, a former financial analyst, were known as one of Auckland’s “power couples.” They have two sons, ages 14 and 12.
Home: Renting in Medina while they sell their house in Connecticut and find a place here.
Fun: Fit and trim, Liddell tries to exercise in some form every day. Usually he’ll either run, swim or play a game such as tennis or golf. He played rugby on a regional team in his younger days and later served as a director of the New Zealand Rugby Union.
Kiwi: Liddell, who remains a New Zealand citizen, plans to visit the country a few times a year on behalf of Microsoft. He also plans to fly back for one or two big rugby matches a year.
Analysts said former Chief Financial Officer John Connors, who left to become a venture capitalist at Ignition Partners in Bellevue, will be a tough act to follow.
“John Connors did a great job in my view, so he set the bar high,”‘ Jonathan Rudy at Standard & Poor’s said after Liddell gave his first Microsoft earnings report on July 21. “You could tell he’s new — he said he had to get back to some people on some questions.”
Goldman Sach’s Rick Sherlund said Liddell did a fine job. “I thought he handled it pretty well,”‘ he said after the call.
Here’s an edited transcript of a conversation with Liddell about his new job, his role at Microsoft and his outlook for the company.
Q: Did Microsoft’s financial analyst meeting have an effect? The stock has risen since then.
A: I’m not sure you can put that down to FAM [financial analyst meeting], but probably it came at about the right time. In my mind people have been looking for what’s the catalyst that’s going to push the company’s share price along; they’ve been looking for that obviously for awhile.
Now they’re starting to see some tangible evidence of some of the innovation work that’s going on and some of the investment that’s gone on the last few years. The pipeline of product releases over the next 12 to 18 months is probably the highest it’s ever been in the company’s history — people are actually starting to see that.
Q: Microsoft has saying for years that it’s diversifying beyond Windows and Office. People just sort of nod their head and say yeah, right. Is that message finally taking hold?
A: I think the breadth of the product releases and the breadth of innovation came through pretty strongly at FAM: This is not just Windows, it’s not just Office 12. There’s Xbox coming up and every one of the divisions has a major release of some form or another in the next 12 to 18 months. I’d like to think that message came through pretty strongly.
Q: It starts you off on the right foot. Will it be a challenge to sustain that enthusiasm?
A: I think the opportunity is definitely there. I went out shortly after I joined here and went up to New York and Boston and met most of our major shareholders and a number of analysts and the general perception of the company is still very positive. There is a real desire to see the company do well. Results will tell at the end of the day, but I think the general perception of the company is very good, people are expectant, waiting to see.
Q: It seems like the perception of Microsoft has gone from growth stock to a non-growth stock. Are they’re thinking growth again?
A: That was very much the message Steve [Ballmer] gave at the start of the day [at the analysts meeting] and hopefully the other sessions thereafterward supported that. But he certainly is pushing the growth agenda. He thinks the company, and I agree with him, is poised for growth. Not only in terms of the things that we can see but in terms of some of the investments we’re waiting for, further out.
Q: One of your predecessor’s big projects was an efficacy campaign. What’s the status of that and what are your plans as far as cost cutting?
A: Continuation. John (Connors) was very successful with his team on taking out $500 million to $800 million a year of cost on a like-for-like basis, and I see no reason why we wouldn’t continue that. That’s a 2 to 4 percent productivity improvement on our cost base, which is what most world-class companies would look for.
Q: Can you keep shooting for a $1 billion worth of cuts when you’re rolling out a lot of products and there are a lot of marketing and launch costs?
A: Whether it’s a billion or $500 million, that’s a year by year decision. Can we still aim for about the same run rate as what we’ve achieved in the past? Yes. But distinguish between increasing what we spend and the effectiveness of what we spend. Those are two different dimensions.
We might decide to increase marketing spend but if we do it in a way where we consolidate marketing vendors and spend less per marketing event, we consider that to be a cost saving.
Q: What is your biggest job here?
A: I think the biggest job is really to get finance to be front and center of helping the whole shareholder value creation process. I think we’ve done a good job in the past with John and his team, but we can add a lot in terms of helping with the growth agenda of the businesses, being a true business partner in terms of thinking about where the opportunities are and helping drive it, and then making sure as we drive growth we do it in the proper way. So it’s not just growth for growth’s sake, but growth where it’s gong to generate shareholder value over time, doing it in a cost-efficient fashion, doing it in a structured fashion and a disciplined fashion.
Q: There was talk about acquisitions at the analyst meeting
A: The typical acquisition that makes a lot of sense for us is, generally speaking, small to medium size. Tens of millions, or maybe a few hundreds of millions, because they give us a product or a team or a beachhead that we can add on to our existing business. We continue to look at and are likely to do a relatively high number of those sort.
Q: Does it reflect a comfort level now that antitrust disputes have cleared a bit, to release more cash — first dividends, then buybacks and now acquisitions?
A: I’d say that’s coincidental rather than driving it.
Q: Will we hear something about dividends after the August board meeting?
A: I’ll give you the standard answer, which is we’ll keep looking at that. We’re never going to foreshadow something.
Q: If you were an investor outside the company, what would you be wishing Microsoft would do now?
A: I think investors are keen for us to continue to prove to them that we can grow — and grow in a significant way. That’s No. 1. The second one is again a common theme — grow in a significant way, but do it in a profitable fashion as well.
Q: Working in the cyclical timber business, there were a lot of hard decisions you had to make — job cuts, spin-offs, things like that. Do you expect to have to make hard decisions like that here?
A: I think what it gives you — a business like that — is being very what I describe as disciplined. Sometimes you apply that discipline unfortunately in a hard fashion. But you just have a general approach that if you’re going to spend money, you make sure you spend it in absolutely the most effective fashion.
That’s what I expect to continue to have to do — be incredibly disciplined about what we do here.
Q: There were a number of divestitures that happened under your watch at Carter Holt Harvey. Do you see that kind of thing happening here — breaking off divisions? Microsoft has done that in the past with some properties such as Expedia.
A: It’s always possible that we might sell something if it didn’t fit, but I don’t think that’s going to be a big part of the next three to five years. Our principal focus is on growth here, so it’s unlikely.
Q: In New Zealand, you were pretty involved in economic development and government-industry partnerships. Do you see yourself doing that kind of thing in Seattle?
A: I’ve always seen the role of a CEO and senior leadership to be wider than just the jurisdiction of the company you work for, so absolutely. I see myself living here for 10 or more years, so over time I’d like to play a part and a role in the Seattle area that’s wider than just Microsoft.
Q: The New Zealand press seemed enthusiastic that there was now a high-level connection between the country and Microsoft. Do you expect to leverage that somehow?
A: I’ll probably visit the country once a year on behalf of Microsoft and help the local business leader, so the linkages will be there but I wouldn’t overplay it as well.
Q: I’ve heard that fitness is important to you and at one point you encouraged your fellow executives to jog around Auckland. Will you do that sort of thing here?
A: Again it’s early days, but whatever I can contribute to the company, absolutely. I see my role as more than just turning out to work and doing the core roles of the CFO.
Having a leadership role in terms of whether it being in this case people’s lifestyle, making them more healthy, if I can do that, fine. If I can do some other thing that’s more germane here, I’ll do that. I’ve got a lot of different interests. I certainly see my role as being more broad based than just the job description.
Q: What are your first impressions of being an executive at Microsoft?
A: My first impressions are very positive. I like the people here, I like the energy level here, I like the no-barriers enthusiasm here. I think the general culture here’s incredibly positive and, despite what some people think, very welcoming to outsiders.”
Q: Some outsiders mesh at Microsoft, some don’t. What are you going to do to be sure you mesh?
A: I think what people expect is you to be damn good at your job. If you can gain credibility by being very good at what you do, I don’t think there will be any problems succeeding in this company.
So what’s the best possible thing I can do to integrate myself, other than forming good personal relationships with people here? Be extremely good at what I do. It’s pretty simple.
Q: Any surprises?
A: How much paper we use.
Q: I understand that working for Steve Ballmer, you have to know your numbers pretty well.
A: He’s been with the company so long and he’s an incredibly bright guy, knows the numbers himself inside out. To have a good conversation with him you’ve really got be on par with him in terms of understanding what’s going on. The CFO should do that.
I wouldn’t pretend to know every number in the place after a couple of months but it’s a pretty big focus, to get on top of the company.
Brier Dudley: 206-515-5687 or email@example.com