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Major hedge fund lead says Microsoft's Ballmer should quit

updated 11:10 pm EDT, Wed May 25, 2011

Hedge fund exec says Microsoft's Ballmer an anchor

Dissent around Microsoft's leadership became more public Wednesday with a speech from Greenlight Capital manager David Einhorn. The hedge fund operator told those at the Ira Sohn Investment Research Conference Microsoft CEO Steve Ballmer had to "give someone else a chance" at the top spot. He considered the early Microsoft executive the "biggest overhang" on Microsoft's stock because he was mired in traditional behavior.

The criticism isn't new but is coming from a relatively influential source. Einhorn's hedge fund has a relatively large amount of stock in Microsoft compared to others, at 0.11 percent, and could be influential enough that a loss of confidence would lead to a ripple effect among others.

Most attacks against Ballmer have centered on his inability to drive the company's performance outside of its core Windows and Office businesses. In online, where Microsoft is hoping to challenge Google, the company has been willing to lose hundreds of millions of dollars each quarter and has gained search share partly through a deal that has Yahoo using Bing as its search engine.

Mobile has often been cited as the biggest point of failure. Microsoft was one of the earliest to get into smartphones with Pocket PC (later Windows Mobile) and Tablet PC, but it was eclipsed quickly as the BlackBerry, iPhone, and later Android passed it by. Tablets have been a sore point after iPads outsold lifetime Tablet PC numbers in nine months despite Ballmer having most of his decade-long CEO tenure to break Windows tablets out beyond a niche. Windows 7 and Windows Phone 7 have so far proven unsuccessful, even if WP7 has been critically well-received.

A few areas outside of the core have been successful, such as the Xbox line, but both current and former executives have complained that Microsoft under Ballmer is too protective of founder Bill Gates' legacy. Among the accusations have been those of a Apple and IBM have passed it in pure market cap, and Apple has not only passed Microsoft in revenue but now in profit as well despite the lower margins on hardware sales than software.


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By Electronista Staff
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Comments

  1. Cronocide

    Fresh-Faced Recruit

    Joined: Nov 2010

    +18

    He should resign.

    It would be interesting to see Microsoft start competing.
    That is the only thing so far that they haven't copied from Apple or Google.

  1. climacs

    Forum Regular

    Joined: Sep 2001

    +16

    what took so long?

    these people like Einhorn are much more savvy than you and I; what on Earth did they see in Ballmer that led them to wait so long to state the blindingly obvious?

    Not that this AAPL shareholder minds all that much; I'd love to see Ballmer retire as CEO 20 years from now. It's just stunning how long this emperor has been allowed to parade around buck nekkid.

  1. climacs

    Forum Regular

    Joined: Sep 2001

    +23

    point of comparison

    linked article @ Reuters says if you'd put $100,000 into MSFT you'd have $69,000 today.

    OTOH if you'd put $100,000 into AAPL 10 years ago, you'd have $3.3 million.

  1. climacs

    Forum Regular

    Joined: Sep 2001

    +17

    the only fair thing to do

    liquidate and distribute the proceeds to shareholders

  1. The Vicar

    Junior Member

    Joined: Jul 2009

    +10

    Prediction

    If Ballmer is kicked out (or resigns), the new CEO will flail around a bit, and the end result will be that Microsoft fails.

    I've said it before, and I'll say it again:

    Microsoft is suffering from having "won". It's two main sources of profit are Windows and Office, and both have essentially reached market saturation. Both are still turning profits, and even increasing profits year-over-year, but the market demands stronger growth than that. Windows and Office will never have the dramatic increases which the market insists are necessary for "success" ever again; any Microsoft "success" will have to come from somewhere else.

    The only strategy Microsoft can follow with any reasonable hope of success is to release a lot of different products in new areas as fast as they can be gotten to a reasonably complete state, and hope that at least one of these new products will become a runaway success.

    Ballmer "gets" this. It's what he's been doing. Admittedly, he has screwed up a couple of times (for example, he neutered the Kin in favor of Windows Phone 7, which was dumb), but he's doing approximately the right things.

    His replacement will either continue to do the right things, which will make him just another Ballmer and just as dissatisfactory to Wall Street, or else will give up on the new product development -- which means Microsoft won't even fight its march to obsolescence.

  1. ASathin8R

    Fresh-Faced Recruit

    Joined: Oct 2010

    +7

    M$ strategic vision under Ballmer

    Plan A: Windows and Office

    Plan B: Windows and Office

    With Ballmer at the helm, this will remain the vision for the next decade too.

    They need a CEO who isn't content to hide behind these two big cash cows and get out there and show some real leadership and innovation.

    Can anyone think of anything that Microsoft has ever done where they didn't follow some other trailblazer first?

  1. TomMcIn

    Fresh-Faced Recruit

    Joined: Dec 2001

    +19

    Let Him Be

    Where else are we going to get so many laughs?

  1. SierraDragon

    Mac Elite

    Joined: Mar 2004

    +14

    MS, not just Monkey Boy

    Ballmer is admittedly a bimbo, but he is just maintaining what MS is and always has been. Under Gates MS innovated approximately zero (although Gates took great pains to use the word innovate in every sentence), just bought things (like DOS) and cut deals.

  1. chas_m

    Moderator

    Joined: Aug 2001

    +17

    What the heck is wrong with you people?!

    I'm seeing comments here that are genuinely and sincerely offering MS considered advice on how to IMPROVE their situation.

    No no no no no no NO!!

    We want Ballmer RIGHT WHERE HE IS. He's doing a FANTASTIC JOB, and I wouldn't dream of replacing him with someone who might turn that (very) slowly sinking boat around. He is the best thing that could have possibly happened to Apple this side of letting Carl Paladino run the place. He hasn't got that long until his own retirement -- a few more years -- so I say let him stay, from my perspective I couldn't ask for much better.

  1. SockRolid

    Forum Regular

    Joined: Jan 2010

    +5

    Time to retire. Or maybe not.

    Steve, bro, you've made enough money to retire. Very, very comfortably.

    Then again, chas_m does have a good point. We need Ballmer at the helm of MIcrosoft. To keep it down. To keep Microsoft laser-focused on the mid-1990s. So the rest of the tech world can look at them and say "That will never happen to us."

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