R. JAI KRISHNA, ROMIT GUHA and DHANYA ANN THOPPIL

Microsoft Corp. Chief Executive Steve Ballmer dismissed questions Thursday about the software giant’s loss of the title of most valuable technology company to rival Apple Inc.

Instead, Mr. Ballmer said Microsoft is focused more on launching new products and improving profitability. “We are executing very well, that’s going to lead to great products and great success,” Mr. Ballmer said at a press conference.

Mr. Ballmer’s reassurance comes a day after Microsoft’s market capitalization slipped below Apple’s, prompted by concerns of the European debt crisis spreading into broader markets.

Since Mr. Ballmer took over from Bill Gates as CEO in January 2000, Microsoft’s market value has more than halved from $556 billion to Wednesday’s close of $219 billion. Rival Apple’s market value has surged from $15.6 billion to $221 billion over the same period.

Mr. Ballmer said he remains unfazed despite Apple assuming the position of the technology king. “I will make more profits and certainly there is no technology company in the planet which is as profitable as we are,” he said. “Stock markets will take care of the rest,” he added.

For the January-March period, Microsoft posted a net profit of $4.01 billion on revenue of $14.50 billion. Apple’s net profit was $3.07 billion on revenue of $13.50 billion.

Analysts attribute the value-decline at Microsoft to its inability to capitalize on new technologies such as wireless and digital music at its entertainment division. Apple’s success with its iPod and the iPhone came at the expense of Microsoft’s efforts in those areas.

The company’s entertainment division, formed in 2005, makes Xbox video game consoles, Zune music players and mobile phone software. While the gaming console business was a big hit for the company, both Zune and the mobile phone software business failed to make an impact.

One of the major challenges faced by the division is that despite being an early entrant into mobile devices such as smartphones, with its Windows Mobile operating system for handsets, it is now lagging behind cutting-edge technologies of Apple’s iPhone and Google Inc.’s Android operating system.

In a bid to turn around its entertainment business, the company reorganized the division earlier this week, with two of its veteran executives retiring and Mr. Ballmer taking over the leadership at the segment—something that he usually does when he isn’t satisfied with a unit’s performance.

“I wouldn’t predict any drastic changes” in the future strategy of the division, he said. “We’ll have to accelerate plans,” he added.

With a renewed strategy in place, Mr. Ballmer is optimistic about the launch of the Windows Phone 7 series by the end of this year, after the company overhauled the operating system for smartphones in February. This series will bring together Xbox live games and the Zune music and video experience on mobile phones.

“It is a long game. We have good competitors … we too are very good competitors,” Ballmer said.

Twitter This

User Name: Password: