Ballmer should step down, says high-profile hedge fund manager

By Trevor Mogg May 26, 2011

Greenlight Capital’s president David Einhorn has called for an end to Steve Ballmer’s tenure as Microsoft’s CEO. The influential hedge fund investor, who in 2008 predicted the downfall of Lehman Brothers, said of Ballmer: “We’ve seen what you can do.”

In a speech at the Ira Sohn investment conference in New York on Wednesday, Einhorn went on to say, “His continued presence is the biggest overhang on Microsoft stock.” Ballmer has been at the helm of the computer giant since 2000.

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According to a Wall Street Journal report, Einhorn said it was unproductive research and development at Microsoft, among other things, that was causing the company problems. In further comments, he said Ballmer was “stuck in the past,” which has caused the company to fall behind in areas such as online search and social networking.

An FT report points out that David Einhorn is the first shareholder of note to publicly call for an end to Ballmer’s tenure at the top. In his presentation, Einhorn said that he believed Microsoft still had great potential, but that changes need to be made. Cloud computing is one area where Microsoft could excel, he said. Also, following its link-up with Nokia, there was an opportunity for significant success in the smartphone market.

As the FT says, Microsoft shares have remained largely stagnant over the last ten years, and it is this fact which is of continuing concern to investors. Share value has even been on the decline since the Seattle-based company bought Skype for more than $8 billion earlier this month. As some analysts speculated as to what Microsoft might do with a company that lost $7 million last year, others couldn’t work out why Ballmer was so excited about the acquisition. Soon after the takeover, Microsoft founder Bill Gates turned up in an interview to take some of the heat of Ballmer, saying he himself had advocated the purchase.

It remains to be seen whether David Einhorn’s words have any influence on the board of Microsoft and so, for the time being at least, it’ll be business as usual for Steve Ballmer when he wakes up this morning.

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You are what they think you are: Ballmer’s legacy is a lesson in image management

you are what they think ballmers legacy is a lesson in image management steve ballmer steps down microsoft ceo

After more than a decade at the helm of Microsoft, Steve Ballmer announced on Friday that he will step down as CEO within a year. There are a lot of lessons to take away from Ballmer’s tenure at what was once the largest company in the world, but one of the biggest is the importance of marketing, and making sure to manage your own image. Ballmer was one of the most successful CEOs in technology over the last decade, but his image doesn’t reflect that; we see him for his failures and not his successes. Let me explain, and talk a little more about what Microsoft may look like after Ballmer.
Steve Ballmer’s track record
Ballmer had four problems he needed to deal with as CEO, but only two were on the table when he grabbed the reins from Bill Gates in 2000: billions of dollars in potential fines stemming from the Department of Justice’s ongoing antitrust lawsuit, and an organization that was more focused on infighting that competing. Later, he would also need to tackle two more: the rise of cloud computing and mobile devices.
If you’re an individual, you have to own how people see you; if you’re a CEO, you have to own how people see the company.
Of these four challenges, he succeeded at half. Ballmer managed to steer Microsoft out of its litigation with the company intact, and got on top of the cloud movement quickly with Azure and SkyDrive, both of which were successful. However, he waited too long to address the organizational infighting, which he only got to a few months ago, and clearly missed the mark on mobile devices. Of course, other than Apple, so did every other PC company on the planet. Blackberry and Palm, two companies solely focused on that business, also managed to miss, suggesting that was a lot harder than it looked from the outside.
That’s not a bad track record, but Ballmer’s reputation doesn’t reflect it. Had he not crippled corporate marketing, Ballmer’s successes would have gotten more ink, and Microsoft’s shares would have likely traded far higher. Recall that much of the reason Microsoft’s share value dropped was because he moved to buy Yahoo. Even though Microsoft didn’t buy the firm, the company’s shares never really recovered. That was clearly an image problem, because the Microsoft that existed before the Yahoo attempt was the same company that existed after, only the way we valued the firm changed.
Apple further pounded on Microsoft’s image during the Vista years, and the Zune was underfunded, but still very visible. But Microsoft remained one of the most profitable companies in the world, and Bill Gates the richest man, virtually throughout Ballmer’s tenure.
What will the ‘new’ Microsoft look like?
There are only a handful of people who could run Microsoft. I think the best candidate is Qi Lu, currently Executive VP of Applications and Services. While there are three others in the running, unless something happens to Lu or Microsoft goes external, I think he’ll get the nod. Outside the firm, there are two likely candidates: Pat Gelsinger, Intel’s ex-visionary and a trained CEO, and Bill Veghte, ex-Microsoft and recently promoted in HP. Of the two, Gelsinger would be the better choice.
Any of these folks, if chosen, would likely double down on cloud subscription services and back off of device efforts like Surface. Their goal would be to make Microsoft more like Google on steroids, and less like Apple. This would be consistent both with their respective skill sets, and the direction of the market. For instance, in gaming, think more like OnLive and less like Sony.
Own your image
If you look over at Apple, Tim Cook is making the same mistake that Ballmer did. He is losing control of Apple’s image, and Apple is drifting down even faster than Microsoft did as a result. If you’re an individual, you have to own how people see you; if you’re a CEO, you have to own how people see the company.
This is the one thing that CEOs like Cook and Ballmer simply don’t understand about Steve Jobs’ success. Jobs knew that image is everything, and that perception is reality. Jobs made us see Apple’s products as magical, and Microsoft’s as crap. Whoever takes over for Ballmer needs a little bit of Jobs’ magic if they want to be more successful than Steve was.
In the end, the new Microsoft will likely specialize in cloud services, with products like Office365 and SkyDrive, and less in operating systems like Windows, and hardware like the traditional Xbox. It’ll be an interesting ride. Oh, one final thing, when the market makes the next move, if Microsoft doesn’t lead it, the next CEO will likely go the way Ballmer did. The new CEO needs to own Microsoft’s image and make sure the company leads the next big technology wave. We’ll see.

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Steve Ballmer stepping down as Microsoft CEO within the next 12 months

microsoft steve ballmer fisticuffs

Microsoft CEO Steve Ballmer has officially announced plans to retire within the next 12 months. The news comes as a shock to many of us, as Microsoft is just getting over the honey moon stage of Windows 8, about to release Windows 8.1, and settling in as a "devices and services" company.
In an internal email from Ballmer published on Microsoft's press page, Ballmer writes that the timing of leaving the company is never good, but that now's the right time to do it.
"My original thoughts on timing would have had my retirement happen in the middle of our transformation to a devices and services company focused on empowering customers in the activities they value most," Ballmer said in the email.
Ballmer stressed that this is a "time of important transformation." We're not sure if he's talking about just his leaving the company and bringing in new blood, or if he's referring to the ever-changing Windows 8 operating system, and new "devices and services" plan. In Microsoft's official press release, the term "devices and services" is used three times in a few short paragraphs.
We've sensed a change in Ballmer the last few times we've seen him this year. At Microsoft's latest Build developers' conference, and at the Windows 8 event last October, he was missing his characteristic high Ballmer energy. It's possible that disappointing sales of Windows 8, Windows RT, and the Surface tablet could be responsible for his departure.
A special committee, made up of company founder Bill Gates and chaired by John Thompson, will select Ballmer's successor. Gates commented, saying that Microsoft is "fortunate to have Steve in his role until the new CEO assumes these duties."
Steve Ballmer has been at Microsoft since it was a fledgling computer company. In his departure email, he noted that Microsoft has grown from a $7.5 million company into a $78 billion leader, and its employees have grown from about 30 people to almost 100,000.
So, who will the new Microsoft CEO be? Will it be someone internal, like Julie Larson-Green, or someone from outside of the company. Stay tuned as the story develops.

Computing

Ballmer: WP7 could make it to third place, Windows 8 downloaded 500,000 times

Steve Ballmer just spits out numbers. He can't seem to help himself. Earlier this year, he claimed that Windows Phone 7.5 (Mango) would have 500 new features and said Windows 8 would be available in mid 2012. Yesterday, in an appearance at Microsoft's BUILD conference he revealed that the Windows 8 developer preview, a running copy of Windows 8 that anyone can download and install, was downloaded more than 500,000 times in its first night of availability.
"There is no phone, there is nothing on the tablet, there is no operating system on the planet that will ship 350 million units of anything other than Windows," he said, according to AllThingsD. "Our approach to these new opportunities is centered in Windows. It’s not about doing something else. It’s about broadly re-imagining Windows."
Hopefully said developers are enjoying their time with the new OS. For more information about the Windows 8 Developer Preview, check out our wrap of the BUILD keynote by Steven Sinofsky. Have you tried out Windows 8 yet? If so, please let us know what you think of it. If not, you can download it here.
Windows Phone could be third
Continuing the numbers, during a financial analyst meeting yesterday, Ballmer also said that Windows Phone will definitely make it to "third" in the smartphone race. Yes, he's aiming for third place.
"I won't say I'm not saying I love where we are, but I'm very optimistic to where I think we can be," said Ballmer via The Register. "I think with a little bit more effort, a little bit more energy, the level of enthusiasm from the customer base is high enough we've just got to kick this thing to the next level. And I think we're in absolute good shape in order to be a very strong third ecosystem in the smart phone world."

(Image via Engadget)