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(Reuters) – Every July, Microsoft Corp invites a sizable Wall Street crowd to its leafy, low-rise campus outside Seattle. Chief Executive Steve Ballmer and his top managers take a half-day to explain where the world’s biggest software company is going, to a generally friendly audience.

This year things didn’t go quite according to plan.

Ballmer, CEO since 2000, talked excitedly of Windows 7, its new Bing search engine, new Phone software and the Xbox game system. But he was skimpy with details of how Microsoft would counter Apple’s hugely popular iPad, a question that has been vexing investors.

At the end of the presentations, Sarah Friar, the influential Goldman Sachs analyst and a long-term bull on Microsoft’s stock, seemed unconvinced. She wanted Ballmer to take another stab at explaining the iPad counter-attack. "It feels like right now you are not completely clear," said Friar. "I just want to give you another chance to give a succinct … response."

Always an energetic presence on stage, Ballmer raised his voice even louder than usual, and with a resounding slap of his hands, repeated his main points methodically. Slates and tablet computers are coming soon. They will have Intel chips. They will run Windows. "We’re going to sell like crazy. We’re going to market like crazy," he boomed.

Three months later, Microsoft and its hardware partners have unveiled only one Windows tablet, which does not seem to be an iPad contender, much less a killer, as Apple’s nifty gadget heads toward 8 million sales, eating away at the lower end of Microsoft’s core PC market.

Partly because of this, Microsoft’s stock has drifted lower, and is now down 16 percent for the year, despite a surge in tech stocks that has pushed the Nasdaq up 10 percent in the same time. The shares remain resolutely stuck at the same level as 2002.

At the beginning of October, Goldman’s Friar threw in the towel, pitching Microsoft out of her bank’s Americas Buy List and downgrading it to "neutral" — Wall Street’s euphemism for "dead money." One of her complaints was the lack of a "coherent consumer strategy," the very thing which Microsoft and Ballmer took such pains to lay out at the July meeting.

The downgrade by Goldman, the company that led its initial public offering in 1986, was an unexpected knock for Microsoft, which has no shortage of cheerleaders on Wall Street, given the potential fees it represents for mergers and corporate bond issues.

Coming only four months after Apple surpassed Microsoft in market value — until recently an unthinkable event — the downgrade brought into focus questions about Microsoft that are increasingly being asked by customers, investors and even some employees. Why hasn’t the stock moved in eight years, despite more than doubling profit and sales in that time? Is Microsoft really at the forefront of technology? Why can’t it invent popular gadgets like Google or Apple? Is Ballmer still the right person to lead the firm?