May 30 (Bloomberg) -- Microsoft Corp.'s Steve Ballmer is heading to Wall Street to meet with analysts and investors in an effort to blunt criticism that he's ignoring shareholders.

The chief executive officer of the world's biggest software maker will spend two days this week giving speeches and hosting small gatherings in an effort to persuade shareholders that his new spending plan will help bolster the stock price.

``He's not spending enough time listening to people in the capital markets,'' said Michael Holland, who oversees $4 billion as chairman of Holland & Co. and has owned Microsoft shares since he founded the firm in 1995. ``What I want to hear is how much he listens. I want to see how well he does not being defensive and adversarial but being interested in hearing people.''

Ballmer, who will host events with investors in New York tomorrow and in Boston the following day, has never done anything like this in his six-year tenure as CEO, spokesman Tom Pilla said. Investors want him to respond to calls to boost the stock by using Microsoft's $34.8 billion cash hoard to buy back shares.

Shares of Redmond, Washington-based Microsoft are trading near their lowest in 3 1/2 years. The stock is the third-worst performer in the Dow Jones Industrial Average in 2006. The shares fell 2 cents to $23.72 on May 26 in Nasdaq Stock Market composite trading, before the Memorial Day holiday.

The slump prompted at least four significant shareholders to demand buybacks of as much as $100 billion. Ballmer, 50, is also under fire for a decision to increase spending on new products and acquisitions next fiscal year. Shareholders have complained to his deputies about both in the past month.

Biggest Ever

A buyback of the size that hedge fund manager Alan Fournier and Loews Corp.'s Joseph Rosenberg are calling for would be the largest in history. Ballmer already unveiled the biggest-ever return of capital less than two years ago. He has about $6 billion remaining in a $30 billion buyback announced in 2004, when Ballmer also paid a $32 billion one-time dividend.

Finance chief Chris Liddell on April 27 declined to say whether a new repurchase will begin when that one is completed. Liddell will accompany Ballmer, Pilla said.

``The balance sheet is not aligned with the outlook for the company's capital needs,'' said Fournier, who is at Pennant Capital Management in Chatham, New Jersey, and plans to hear Ballmer talk in New York tomorrow. He said Ballmer should buy back $100 billion of stock and take advantage of a ``very undervalued'' share price.

Lagging EPS

Microsoft is boosting spending to foster growth in new markets and catch up to Google Inc. in the Internet search and advertising markets. The spending will cut earnings to $1.40 a share, according to the average estimate from Thomson Financial. That projection is down from $1.53 before the announcement.

The company won't be able to grow quickly anymore and is too slow at developing software to keep pace with companies such as Google, said Loomis, Sayles & Co. fund manager Tony Ursillo.

Last quarter, Microsoft's No. 1 and No. 3 institutional holders, Barclays Plc and Fidelity, trimmed their stakes. Loomis sold 91 percent of its Microsoft stake.

Those who are buying shares are value investors that expect more of the cash to come back to holders. Capital Research & Management Co., which has the biggest value fund by assets, added 13.7 million shares last quarter. Richard Pzena, who's seeking a buyback of as much as $60 billion, bought 1.56 million shares.

Big Three

Typically, Ballmer limits such sessions to the company's annual analyst day, shareholder meeting and an occasional sitdown with an investor. Pilla wouldn't comment further on the trip.

Ballmer tomorrow will address a Sanford C. Bernstein & Co. conference and meet software analyst Charles Di Bona. He also plans to talk with UBS AG's Heather Bellini and Goldman, Sachs & Co.'s Rick Sherlund, and will speak at a Goldman luncheon for clients. Those are the three top-rated software analysts by Institutional Investor magazine.

``I want to ask him about the company's capital structure,'' Bellini said. ``Will they take on debt and raise the buyback, and if not, why not? I also want to know what kind of sustainable earnings growth they can drive from increased investment.''

Rosenberg, chief investment strategist for Loews, owned by the Tisch family, started a campaign this month for a $60 billion stock repurchase, calling Microsoft ``the most overcapitalized company in the country.''

Hedge fund manager David Einhorn of Greenlight Capital Inc. in New York said Ballmer should step up the company's buyback to $75 billion by using up the cash and taking on $40 billion in debt. T. Rowe Price Associates Inc., the No. 10 institutional holder, also wants a bigger buyback.

Microsoft generates $15 billion to $17 billion in free cash flow annually and should be spending more than that on a buyback each year, said Ken Allen, an analyst at Baltimore-based T. Rowe.

Holland said he initially thought a large share repurchase was a ``crappy idea.'' He now says Ballmer should consider it and is concerned Ballmer will reject a big buyback outright.

``Microsoft isn't a private company, and they need to worry about the stock price,'' Holland said. ``If Ballmer is dismissive of the idea, it's a bad sign.''

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net.

Last Updated: May 30, 2006 00:13 EDT