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Some top investors and former employees are calling for Microsoft CEO Steve Ballmer's resignation.   (Source: Reuters)

IBM on Tuesday past Microsoft in market cap for the first time in decades. Some perceive Microsoft as a "dying" brand.  (Source: Silicon Angle)
No more "Developers, developers, developers"? Top investors demand Ballmer step down

Microsoft Corp. (MSFT) Chief Executive Steve Ballmer has always had his critics.  His hard-nosed style of management offended some, as did his colorful personality.  But criticism of the CEO, who replaced Bill Gates in 2000 for the position, has been mounting of late as the company has struggled in certain sectors -- like smartphones and tablets -- and made questionable decisions, as well -- like purchasing video messaging service Skype at nearly twice its market valuation.

At a financial summit -- the Ira Sohn Investment Research Conference -- in New York on Wednesday, David Einhorn, an influential hedge fund star and manager of a fund at Greenlight Capital, delivered harsh words for Microsoft's boisterous chief.

He commented, "[G]ive someone else a chance.   His [Ballmer's] continued presence is the biggest overhang on Microsoft's stock."

Mr. Einhorn has vested interest in the company's success.  He recently executed a large purchase of the company's stock.  His firm now owns 9 million shares, or about 0.11 percent of the company's total shares.

While some properties like the Xbox console and the Windows 7 operating system have been well received and sold great, investors have largely focused on the company's misses.  CNN Money last year carried a scathing editorial in which it suggested that Microsoft was "dying".

With stock worth under 10 times the company's earnings, Microsoft shares are considered undervalued.  But not everyone is purchasing due to the cloud of doubts hanging over the company.

Last year Microsoft was notably passed in market cap by a familiar old foe -- Apple, Inc. (AAPL).  While many jeered at this news, Apple has since somewhat silenced critics by passing Microsoft on quarterly profits.  On Tuesday further concerns were raised when lumbering old giant International Business Machines Corp. (IBM) passed Microsoft in market cap for the first time in decades.

After years on top of the tech industry in stock, revenue, and profits, Microsoft is finding itself fading from the race.  Does that require a major leadership shift?  Some argue that it does.



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RE: Problem
By Brandon Hill (blog) on 5/26/2011 10:25:21 AM , Rating: 2
quote:
The problem isn't getting rid of Ballmer, that's the easy part. It's finding someone to replace him with.


Exactly!! Hasn't Microsoft lost like a dozen or so key execs in the past two or three years? There's nobody left!

About the best thing they could do would be to bring someone from the outside, and with a company so big like MS, that would likely be a disaster.


RE: Problem
By DanNeely on 5/26/2011 10:29:58 AM , Rating: 4
Yup. Ballmer sacked or drove off every plausible internal successor.


RE: Problem
By dani31 on 5/26/2011 10:33:16 AM , Rating: 1
They need better management and a clearer vision. For this they can safely get someone from the outside, it's not like replacing their key software designers.

No manager is irreplaceable.


RE: Problem
By robinthakur on 5/26/2011 12:43:10 PM , Rating: 3
Agreed. It's a very depressing situation actually because MS's workforce are generally incredibly bright people and they make some great products, whilst Ballmer intimidates them all. This is one very good example where the person leading the strategy at a company was completely out of sync with the market and where it was heading.

In a way I feel for Ballmer though. Microsoft's range of products is now vast, and how can one focus adequately over such a diverse catalogue and still ensure quality is kept high? Critically, once the financial markets lose respect for you, it is nearly impossible to bring it back, and I get the impression that this Hedge Funder is merely articulating in public what many have been saying in private going back a long way. If he decides to go, watch MSFT rocket upwards...

Ballmer is bullish and will never shy from a fight, even if it isn't in MS's interests in the longer term. He is a brilliant attack dog, but does not have the vision to be leading a top technology company. The 2 things which lost MS the biggest cachet of respect were Vista, and crucially people seeing Apple and Google as competitors.

Next to Microsoft's lumbering giant of a company, both of the other companies seem more agile even if neither of them really compete tangibly on any other front other than public mindshare. Microsoft is a software company, Google is in advertising and Apple is a branded ecosystem of hardware and software. Even if you may hate Apple, their direction and determination are peerless because they are strongly led by Steve Jobs and it is unsurprising that this zeal extends to their customers. As much as I love Windows 7, SharePoint or Visual Studio they do not excite me as products.

Critically, MS has left failing products on the market just long enough for people to remember them (Kin, Zune, Vista, Wimo, Windows Live) and allowed it to taint their brand, not to mention juicing up more cash to keep them going. Those that remain such as the Xbox, which started out very shakily, are not exactly gold mines.

I think MS is too tolerant within their management structure of failure and is too vertical to be managed effectively. To say that Ballmer cannot be replaced is erroneous, but in terms of who would be qualified to replace him, alot of Senior execs would either view this as a tremendous opportunity or a poisoned chalice. It can be done, as HP's new CEO seems to be getting off to a decent start. I think personally, Bill Gates is the obvious choice and inspires considerably more respect within MS and the wider industry than Ballmer ever has.


RE: Problem
By Samus on 5/26/2011 1:00:57 PM , Rating: 2
Right, but Google, Apple, Intel, and Oracle have the bright kids now. I had a friend out of engineering school (Rose-Hulman) trying to get a job at MS for years, he even volunteered relocating from Kirkland to Redmond with his girlfriend (she brought him out to Kirkland after they graduated). MS gave him two interviews with no follow ups. Now he works at Intel and lives in Portland, Oregon.

Microsoft is sucking the talent.

And damn this coffee is delicous! I'm going to smack that new intern on the ass next time she toots by.


RE: Problem
By omnicronx on 5/26/2011 10:42:45 PM , Rating: 2
Please for the love of god stop making blind statements based on the experience of a friend.

MS has and still poaches the best of the best computer engineering students (and foreign workers) each year. Not saying others don't either, but you are kidding youreslf if you think 'Google, Apple, Intel, and Oracle have the bright kids now'

Furthermore, when you combine hardware companies and software companies together in the same blanket statement, you lose all credibility.

Microsoft is unmatched in terms of software development. While others such as Google are catching up, MS has no shortage of bright individuals, that's for sure.. (To give you an idea how much bigger MS is, they have over 90 thousand employees, while Google has around 1/4 that number)


RE: Problem
By robinthakur on 5/31/2011 11:32:04 AM , Rating: 2
Microsoft's Server products are fantastic and rightfully sell by the truck load. If you look at the Windows Phone 7 development suite, it is likewise brilliantly executed, so the problem is that MS is not properly communicating this to their target market or their target market has already stopped listening.

What MS really falls down on is the consumer market or anything where they market direct to the consumer. Even the Xbox (a rare hit) is more its own brand than a bona-fide MS brand. The danger is that the brand becomes toxic to consumers due to too many failures and the feeling that MS is not innovating anymore, they are following and that other companies can do the same things better and more appealingly.

Again, the true problem here is not today, it is 5 years in the future as their market share is eroded, most probably because the vast majority of their public traditional customers transition to devices which don't run windows/office etc. Microsoft desperately need a clear vision in this arena or they are simply acting defensively and burning money for no return. The first thing they should do is develop Office (and SharePoint integration) for other Operating Systems or market their own OS's with that integration far more persuasively. Whining that "people like the OS once they use it" does not explain the poor sales or the fact that so few people are even willing to try it.


"Intel is investing heavily (think gazillions of dollars and bazillions of engineering man hours) in resources to create an Intel host controllers spec in order to speed time to market of the USB 3.0 technology." -- Intel blogger Nick Knupffer














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