Prominent hedge fund manager calls for Microsoft's Ballmer to step down
Influential hedge fund manager David Einhorn called Microsoft CEO Steve Ballmer "the biggest overhang" on the company's stock at an investment conference on Wednesday, saying he should step aside and "give someone else a chance."
Einhorn serves as president of the Greenlight Capital hedge fund, which had roughly $7.9 billion in assets at the start of the year. He gained prominence in the spring of 2008 when he predicted the accounting troubles that would eventually lead to investment bank Lehman Brothers' collapse.
As of the end of the first quarter, Greenlight owned approximately 9 million shares of Microsoft, or roughly 0.11 percent of the company's outstanding shares.
Speaking at the Ira Sohn Investment Research Conference in New York on Wednesdsay, Einhorn voiced strong concerns over Ballmer's ability to lead the company into the post-PC era, characterizing him as stuck in the past, Reuters reports. According to the report, Einhorn's remarks echoed comments that "some investors have said for years in private."
"His continued presence is the biggest overhang on Microsoft's stock," Einhorn said, as he called for Ballmer to "give someone else a chance" to lead. Shares of Microsoft closed the day at 24.19, up 0.17 percent. The company's stock has stock has dropped by more than 50 percent since Ballmer took over for founder Bill Gates as CEO in January 2000.
Einhorn also called for Microsoft to consider strategic alternatives to its the online services division, which has lost $7 billion over the past four years, according to the report.
Gates brought Ballmer on as Microsoft's first business manager in 1980. Ballmer earned a bachelor's degree in mathematics and economics from Harvard, where he lived down the hall from Gates, before attending the Stanford University Graduate School of Business.
Microsoft Chief Executive Steve Ballmer | Photo Credits: AP
Ballmer has been relatively candid about his recent struggles in the company. Earlier this week, he admitted that Windows Phone 7 had arrived "a year later" that he wished.
Last summer, he noted that the company felt pressure from Apple, which had sold more iPads "than [he'd] like them to sell."
An SEC filing by the company last fall revealed that Microsoft's board of directors had were dissatisfied with Ballmer's performance in the mobile market. "The unsuccessful launch of the Kin phone; loss of market share in the company's mobile phone business; and the need for the company to pursue innovations to take advantage of new form factors" were cited as areas of concern.
At a developer forum this week, comments made by Ballmer regarding the next version of Windows were later characterized as a "misstatement."
Several key executives at Microsoft have left the company in recent months. Last October, Ray Ozzie, who served as Microsoft's Chief Software Architect after Gates left, resigned. Following the announcement that Ozzie would step down, one analyst commented that his departure highlighted the fact that "Microsoft has been kind of lost in the woods ever since Bill Gates left."
Several other top executives at the company, including Xbox and Zune leader J Allard; Entertainment & Devices Division head Robbie Bach; and Business Division head Stephen Elop, have left or been dismissed in the past year.
"Thousands of employees have been laid off or fired [from Microsoft] over the past two years," according to Don Dodge, who served as Microsoft's director of business development for its Emerging Business Team before being laid off.
"Losing a seasoned exec like Bob Muglia is a big, but recoverable loss." Dodge, who now works for Google, wrote in a blog post earlier this year. "Losing Muglia, Robbie Bach, Steve Elop, Ray Ozzie, Chris Liddell, Kevin Johnson, Jeff Raikes, and other senior execs is devastating. The effects aren't visible yet. It takes years to unfold. Each individual business division will get a new leader, and revenues will continue to chug along.
"But, who will be the visionary for the future? And, who will be ready to step in as CEO when Ballmer leaves? Those are billion dollar questions."
Einhorn serves as president of the Greenlight Capital hedge fund, which had roughly $7.9 billion in assets at the start of the year. He gained prominence in the spring of 2008 when he predicted the accounting troubles that would eventually lead to investment bank Lehman Brothers' collapse.
As of the end of the first quarter, Greenlight owned approximately 9 million shares of Microsoft, or roughly 0.11 percent of the company's outstanding shares.
Speaking at the Ira Sohn Investment Research Conference in New York on Wednesdsay, Einhorn voiced strong concerns over Ballmer's ability to lead the company into the post-PC era, characterizing him as stuck in the past, Reuters reports. According to the report, Einhorn's remarks echoed comments that "some investors have said for years in private."
"His continued presence is the biggest overhang on Microsoft's stock," Einhorn said, as he called for Ballmer to "give someone else a chance" to lead. Shares of Microsoft closed the day at 24.19, up 0.17 percent. The company's stock has stock has dropped by more than 50 percent since Ballmer took over for founder Bill Gates as CEO in January 2000.
Einhorn also called for Microsoft to consider strategic alternatives to its the online services division, which has lost $7 billion over the past four years, according to the report.
Gates brought Ballmer on as Microsoft's first business manager in 1980. Ballmer earned a bachelor's degree in mathematics and economics from Harvard, where he lived down the hall from Gates, before attending the Stanford University Graduate School of Business.
Microsoft Chief Executive Steve Ballmer | Photo Credits: AP
Ballmer has been relatively candid about his recent struggles in the company. Earlier this week, he admitted that Windows Phone 7 had arrived "a year later" that he wished.
Last summer, he noted that the company felt pressure from Apple, which had sold more iPads "than [he'd] like them to sell."
An SEC filing by the company last fall revealed that Microsoft's board of directors had were dissatisfied with Ballmer's performance in the mobile market. "The unsuccessful launch of the Kin phone; loss of market share in the company's mobile phone business; and the need for the company to pursue innovations to take advantage of new form factors" were cited as areas of concern.
At a developer forum this week, comments made by Ballmer regarding the next version of Windows were later characterized as a "misstatement."
Several key executives at Microsoft have left the company in recent months. Last October, Ray Ozzie, who served as Microsoft's Chief Software Architect after Gates left, resigned. Following the announcement that Ozzie would step down, one analyst commented that his departure highlighted the fact that "Microsoft has been kind of lost in the woods ever since Bill Gates left."
Several other top executives at the company, including Xbox and Zune leader J Allard; Entertainment & Devices Division head Robbie Bach; and Business Division head Stephen Elop, have left or been dismissed in the past year.
"Thousands of employees have been laid off or fired [from Microsoft] over the past two years," according to Don Dodge, who served as Microsoft's director of business development for its Emerging Business Team before being laid off.
"Losing a seasoned exec like Bob Muglia is a big, but recoverable loss." Dodge, who now works for Google, wrote in a blog post earlier this year. "Losing Muglia, Robbie Bach, Steve Elop, Ray Ozzie, Chris Liddell, Kevin Johnson, Jeff Raikes, and other senior execs is devastating. The effects aren't visible yet. It takes years to unfold. Each individual business division will get a new leader, and revenues will continue to chug along.
"But, who will be the visionary for the future? And, who will be ready to step in as CEO when Ballmer leaves? Those are billion dollar questions."
Comments
Perhaps then you might release a product on time that works.
Just joking, Bartz is a bigger flop than Ballmer. You can switch the two of them and not notice a difference.
● Computing. Windows, SQL Server, Office, and similar products.
● Entertainment. XBox, Windows Phone, MSNBC, Bing
The argument against doing this is you lose the synergies between the various divisions of MS. But it's starting to become clear those synergies either don't actually exist or are not as powerful as assumed.
Of course, much of that was built from Gate's tenure and I suppose it did not take much to keep that Windows/Office cashcow moving.
That being said, when it comes to actually creating new products and stay on top of the curve in the post-PC era, Ballmer has fallen face-first on concrete.
It's time to change the guard at MS. A few more years of constant battles from Apple and Google/Android and Ballmer's shop will become very irrelevant if he continues to stay at the helm.
That stock split so many times between the mid-80s to the year 2000 it's no wonder the stock won't move anywhere.
They should have accepted the break up into 3 separate corporations, if they were concerned with stock price.
Microsoft is dealing with 8.43 Billion Shares.
Apple is dealing with 921.28 Million Shares.
Then you combine that overly owned Microsoft stock with Ballmer taking the helm and you've got a decade of incompetence across the entire MS Executive Teams, not just Ballmer.
And the rest of the tech world can look at them and say "We must never let that happen to us."
Pllleeeeaaaaassseee let him stay, just one or two more product flops! Pllleeeaaaaasseeee!!!!
lol. you are cruel, give them a chance.
Year-over-year revenue growth is not a measure of success any more than inflation could be considered a success. The only thing Ballmer did right was not drive the company into the ground quickly. But in slow motion that looks to me like what's happening.
I was there during the transfer of power from Gates to Ballmer where things changed significantly internally and not for the better. I walked away, forfeiting thousands of stock options which in the end never would have been worth anything. Microsoft's performance today is merely momentum from the past.
Balmer is a tool, but he is not the problem. The company is too diversified, lacking focus. Splitting the company up is probably what needs to be done. Something like this, perhaps:
● Computing. Windows, SQL Server, Office, and similar products.
● Entertainment. XBox, Windows Phone, MSNBC, Bing
The argument against doing this is you lose the synergies between the various divisions of MS. But it's starting to become clear those synergies either don't actually exist or are not as powerful as assumed.
Yes, spot on!