Prominent hedge fund manager calls for Microsoft's Ballmer to step down

Posted:
in General Discussion edited January 2014
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."
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Comments

  • Reply 1 of 117
    jeffhrsnjeffhrsn Posts: 60member
    My how the mighty have fallen. If this p***k hadn't displayed so much arrogance over his tenure, I wonder if I would have felt so much glee in reading this article.
  • Reply 2 of 117
    drowdrow Posts: 126member
    Bill Gates will return as "CEO SP2"
  • Reply 3 of 117
    monstrositymonstrosity Posts: 2,234member
    True. Here's another tip: Ditch your crappy OS and start afresh on top of Unix.

    Perhaps then you might release a product on time that works.
  • Reply 4 of 117
    this was a little obvious i can say i definitely saw this coming especially after the retracting of his statement about windows 8.
  • Reply 5 of 117
    panupanu Posts: 135member
    If Microsoft dies, my Clues point to Steve Ballmer, with grit and perspiration, in the boardroom.
  • Reply 6 of 117
    ranreloadedranreloaded Posts: 397member
    Pllleeeeaaaaassseee let him stay, just one or two more product flops! Pllleeeaaaaasseeee!!!!
  • Reply 7 of 117
    nowayout11nowayout11 Posts: 326member
    They've set themselves up to be a profitable company for a long, long time. Credit to them for that. But internally, I can kinda see them being a headless chicken as far as direction and big ideas go.
  • Reply 8 of 117
    kingkueikingkuei Posts: 137member
    I feel for the guy but I'm not so sure he's doing a BAD job. He's made some mistakes, but so have dozens of other CEOs; their replacements haven't always been much better. Microsoft is a monstrosity of a ship and it's slow to change course. Nevertheless, earnings look pretty damned good to me. Ballmer is not without his flaws and he is a victim of the times, but I doubt a changeup in CEO will do much for them. Better to stick with continuity with someone who understands the company. Anyone else coming in will be so overwhelmed that I imagine they'd divest most of the company before they make their investors happy. Yet IDK if that's what MS should be doing at this point. From where I'm sitting, you need as much vertical integration as possible to go up against Apple.
  • Reply 9 of 117
    alkrantzalkrantz Posts: 89member
    I don't know how good or bad of a job he really is doing in the day to day running of the company. But i do feel like he is PERCEIVED as an asshat. And that cant be helping Microsoft's stock when so much of the value in the tech world is perception
  • Reply 10 of 117
    Balmer is a chump, I find it hard to see how people in Microsoft would respect him.
  • Reply 11 of 117
    stelligentstelligent Posts: 2,680member
    Regardless of his personality, whether you like him personally or not, it is undeniable that Ballmer is not a proven technology visionary. So yes, it's time for someone else to try. Unfortunately, the recent purges leave the ranks thin. Therefore, it's necessary to bring in an outsider. Fortunately, Carol Bartz will likely be purged from Yahoo soon and so perhaps she will be available.



    Just joking, Bartz is a bigger flop than Ballmer. You can switch the two of them and not notice a difference.
  • Reply 12 of 117
    palegolaspalegolas Posts: 1,339member
    Boom!
  • Reply 13 of 117
    magicjmagicj Posts: 406member
    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.
  • Reply 14 of 117
    sflocalsflocal Posts: 5,949member
    It's my understanding that since Ballmer took over, he has increased revenue year-over-year. So give him that much credit.



    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.
  • Reply 15 of 117
    magicjmagicj Posts: 406member
    One other thing to point out, while Balmer gets the heat, Microsoft's stock price has been flat for the last 10 years, extending back well into the Bill Gates era.
  • Reply 16 of 117
    mdriftmeyermdriftmeyer Posts: 7,503member
    The biggest hang on the Microsoft stock is the overly split Microsoft stock.



    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.
  • Reply 17 of 117
    sockrolidsockrolid Posts: 2,789member
    The world is a better place with Ballmer at the helm of Microsoft. They will stay laser-focused on the mid-1990s. They will milk their corporate IT clients for all they can. They will slowly, ever so slowly, fade into history along with Burroughs, Sperry, Univac, NCR, Control Data, Four Phase, Tandem, and hundreds of other techno-ghosts.



    And the rest of the tech world can look at them and say "We must never let that happen to us."
  • Reply 18 of 117
    Quote:
    Originally Posted by ranReloaded View Post


    Pllleeeeaaaaassseee let him stay, just one or two more product flops! Pllleeeaaaaasseeee!!!!



    lol. you are cruel, give them a chance.
  • Reply 19 of 117
    Ballmer should go. Microsoft should be split up. The crummy products, which means most SKUs, should be tomb-stoned. Then they might have a chance of making something innovative and beneficial.



    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.
  • Reply 20 of 117
    Quote:
    Originally Posted by magicj View Post


    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!
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