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By Ina Fried, 30 July 2004 08:45

NEWS Microsoft CEO Steve Ballmer says the company has the potential to grow its profits quite a bit in the next four years - possibly by $6bn.

Ballmer said he focuses on operating income - a measure that excludes investment income. By that measure - and excluding the costs of a stock option exchange program and legal costs - Microsoft made $13.8bn in the past 12 months.

"How much should we grow? $2bn? $3bn? $10bn? $15bn?" Ballmer asked the crowd attending the financial analyst meeting here. "A very good job would say we might be able to grow a whole Nokia, a whole Siemens, potentially a whole Intel."

Ballmer acknowledged his comments would send the analysts searching for the income of those companies. A Microsoft representative said those companies had a range of operating income of $4bn to roughly $6bn.

Ballmer said he was tempted to say the company might be able to grow by an IBM, but quipped that that was probably out of reach, unless of course IBM's profits declined.

Growth has been the major theme at this year's meeting, with each of the company's seven business units making its case for where its growth will come from.

Both Ballmer and Chairman Bill Gates stressed to analysts the need for the company to continue to make big bets and invest in areas beyond those that have traditionally provided Microsoft with the bulk of its revenue and profit.

That said, the company had little to say on how it was doing with its current big bet--Longhorn, the next version of the Windows operating system.

"We're not saying much new about Longhorn today, it's fair to say," Gates said. Microsoft had originally promised a full test version, or beta, of the software would ship in the first half of next year. On Thursday, Gates would only say that it will ship sometime next year.

Much of the company's energy has been focused on the Service Pack 2 of Windows XP which adds new security features and is slated to ship next month. Ballmer said it was the most research and development money that Microsoft has ever put into an update of Windows that it did not charge for.

Ballmer also promised that Microsoft would be a fierce competitor at the same time it respects its role as a leader. He pointed to a list of companies that the company has in its sights, including Sony, Oracle, Apple Computer, Sun Microsystems, Google, SAP and IBM.

"We're not going to shy away from getting into new areas if it makes sense," Ballmer said. "We're not going to try and shy away from offering value at best price."

Ina Fried writes for News.com