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Beginning of the end? Steve Ballmer is being asked to step down...

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(Reuters) - Influential hedge fund manager David Einhorn has called for Microsoft Corp Chief Executive Steve Ballmer to step down, saying the world's largest software company's long-time leader is stuck in the past.

Microsoft, which was the largest U.S. company by market value in the late 1990s, has seen its stock stand still for the past 10 years as it failed to attack new Internet and mobile computing markets, surrendering leadership of the tech sector to Apple Inc.

Microsoft shares shot up 0.87 percent in after-hours trading, the most of any Dow Jones industrial average component.

Many have been privately critical of Ballmer, but Einhorn's remarks are the most pointed yet from a high-profile investor.

Einhorn's Greenlight Capital hedge fund has been a recent buyer of Microsoft stock, which at under 10 times expected earnings is regarded by many as undervalued.

Greenlight currently holds about 9 million shares in Microsoft, or 0.11 percent of the company's outstanding shares, according to Thomson Reuters data.

Speaking at the annual Ira Sohn Investment Research Conference in New York on Wednesday, Einhorn said it was time for Ballmer -- who succeeded co-founder Bill Gates in 2000 -- to step aside and "give someone else a chance."

"His continued presence is the biggest overhang on Microsoft's stock," he said.

On Tuesday, Microsoft was overtaken by IBM in market value for the first time in 15 years, chiefly because of its static shares. Apple roared past it last year to become the world's most valuable tech company.

An investor who put $100,000 into Microsoft stock 10 years ago would now have about $69,000 worth.

Einhorn, the president of Greenlight Capital, which had $7.8 billion of assets as of January 1, first rose to prominence for making a prescient call on Lehman Brothers' accounting troubles before the bank's subsequent collapse.

Shares of Microsoft edged up 0.87 percent to $24.40 in afterhours trade from a regular-session close of $24.19.
http://www.reuters.com/article/2011/05/25/us-microsoft-idUSTRE74O8BQ20110525

Yes, this is kind of a big deal.
 
To be honest, it's surprising that he lasted this long. I feel like he's been on borrowed time most of this decade.

Where's J Allard these days? :)
 

SHAZOOM

Member
Will they put someone like J Allard in his position? *crosses fingers/makes a wish*

*edit*
Dammit Dreams-Vision! You beat me!
 
Makes sense. They seem structurally unable to innovate at a pace remotely close to Google or Apple. Windows phone is the Zune of the phone world, they have no tablet OS, and their cloud computing offerings remind me AOL in late 90's: horribly clunky, dated, and borderline unusable.
 
Whogie said:
What's special about this J Allard guy?
He was one of the main brains and visionaries behind the Xbox 360. Probably their only really successful commercial product outside of Windows.

Raistlin said:
Beginning of the beginning is more like it
Beginning of the middle for Microsoft. Beginning of the end for Mr. Ballmer. I expect his golden parachute to be massive.
 

notworksafe

Member
TacticalFox88 said:
Apple domination incoming?
Over Microsoft? :lol

Dreams-Visions said:
He was one of the main brains and visionaries behind the Xbox 360. Probably their only really successful commercial product outside of Windows.
Office? Hotmail/Windows Live Mail? MSN Messenger? Those are all pretty popular.
 

Tron 2.0

Member
I do wonder who they could possibly promote to CEO.

Maybe they'd look externally?

notworksafe said:
Office? Hotmail/Windows Live Mail? MSN Messenger? Those are all pretty popular.
Office is the only one of those that generates any revenue, but I see your point.
 

SHAZOOM

Member
Dreams-Visions said:
Hell naw. Microsoft rebirth incoming. Well, eventually.
I agree with this. Microsoft was being too timid under Ballmer's watch. They need as much new blood, or at least someone a bit more open to newer ideas outside of just the stuff that "has proven to work in the past".
 
notworksafe said:
Office? Hotmail/Windows Live Mail? MSN Messenger? Those are all pretty popular.
Mr.Awesome said:

sorry, I meant/was thinking about hardware. Keyboards, mice, webcams, Zune, Kin, WinMo, WinPhone7, etc. No really successful hardware products outside of the 360.
 

numble

Member
notworksafe said:
Over Microsoft? :lol


Office? Hotmail/Windows Live Mail? MSN Messenger? Those are all pretty popular.
Office is big, but the online services division has been an unprofitable money sink forever.
 

Goro Majima

Kitty Genovese Member
Microsoft really needs a guy who can compete and beat Apple's innovation instead of reacting to whatever they do.

I'm not sure how their business end of software development is going though. Regardless, they certainly have lost a lot of the "excitement" around the brand over the years.

Though ultimately, I wonder how much of their innovation and business plan has been hampered by the anti-trust suits against them?
 
If he leaves does that mean that I can finally buy this?


ms-courier-booklet.jpg






hteng said:
windows 7 is a very good OS, they should continue to improve that.

The problem isn't their OS as much as it is that computing is moving beyond personal computers and into new forms that MS doesn't offer a viable product in.

Also, the vast majority of people who own computers don't need to upgrade them as often as they used to. I just left a college that still ran windows XP for every machine in the school.
 
hteng said:
windows 7 is a very good OS, they should continue to improve that.
They will always do that.

But they need to be growing their web services in a profitable manner (Google) and if they really want to compete in the hardware market beyond the 360, they're going to have to do...Idunno...something very different. Maybe take more control over hardware specs like they have done with Win7Phone.
 
outunderthestars said:
If he leaves does that mean that I can finally buy this?


ms-courier-booklet.jpg
No, the team and division that was working on it was dissolved. I'm sure they've all been reassigned to other groups and projects.
 

notworksafe

Member
Tron 2.0 said:
I do wonder who they could possibly promote to CEO.

Maybe they'd look externally?

Office is the only one of those that generates any revenue, but I see your point.
I think Steven Sinofsky (Head of Windows Team) is the best guy they have there. And yes, Office is the only one of those I listed that brings in profit, but it brings in a hell of a lot.

The Business Division, which includes Office had $11 billion in operating revenue last year. Server Tools made $5.5 billion, and Windows made almost $13 billion. (http://www.microsoft.com/investor/EarningsAndFinancials/Financials/fy10/Q4/SegmentRevenues.aspx).

So lets not kid ourselves, Microsoft is still making plenty of money.

Entertainment and Devices (Xbox, Zune, WP7) hasn't ever been a money maker for MS. It's all about Windows, Office, and Server stuff. I think eventually, especially if they keep Ballmer, they'll just become an IBM-ish company. Boring, but making plenty of money with business products and their OS.
 
Tron 2.0 said:
I say goddamn

outunderthestars said:
technically speaking, I think it's created some good standards for the hardware and ensured a level of consistency across hardware manufacturers.

But the tech specs weren't going to sell WinPhone7. That's going to require a small miracle...and some more positivity around the OS. Nokia might be that miracle.
 

alphaNoid

Banned
Ballmer is a businessman not a visionary. Simply put, MS needs a visionary at the helms with great businessmen in his shadows.
 

Tron 2.0

Member
notworksafe said:
So lets not kid ourselves, Microsoft is still making plenty of money.
I am not a Ballmer fan by any definition, but he has to be annoyed that the company is making as much money as it is and the stock is trading so low.
 

jambo

Member
Gates has moved on to greater things. I hope they can find someone who's at least half the visionary he is.
 

notworksafe

Member
alphaNoid said:
Ballmer is a businessman not a visionary. Simply put, MS needs a visionary at the helms with great businessmen in his shadows.
Mark Russinovich (made lots of little diagnostic prgrams including Winternals before being bought out by MS) and Steven Sinofsky are basically the only notable visionaries at the company. Of course, no one has ever heard of them but they'd be very good leaders if they want to go back to being an "exciting" company.

Tron 2.0 said:
I am not a Ballmer fan by any definition, but he has to be annoyed that the company is making as much money as it is and the stock is trading so low.
It's because they aren't exciting and their big consumer pushes fall flat on their faces. The least profitable division at MS (other than Online Sevices, which runs at a relatively small loss) is the most public facing one, unfortunately for them.
 

Polari

Member
Makes sense. I don't think history will be kind to Ballmer. Under his leadership, Microsoft have been embarrassed time and time again. By Apple, by Google, by Mozilla, even by (god forbid) Nintendo.

Windows has stagnated pretty horribly. You look at the advances made in the same period of time by Apple and desktop Linux and you realise the extent to which the rot has set in. Windows 7 is a decent product, but it really represents where Windows should have been three years post-XP, not eight.

Windows Phone 7 is a great product that's simply too late. They let development stagnate and now they're paying the price.

There's barely a part of their business in which Microsoft isn't losing market share. Although desktop Linux has seen limited success Apple's market share is growing (who would have guessed that would true 10 years ago?). Apache (and therefore LAMP) is growing at a faster rate than IIS. IE has slipped from almost complete dominance of the web browser market to around 60%, once again because development stagnated. WP7 is stillborn. Google Docs is going to pose a real threat to Microsoft Office over the next few years.

It's time for a change, Microsoft need an innovator who understands software development. In Ballmer they have neither.
 

Sean

Banned
Ballmer is really terrible imo, he has no vision.

He took five years to come up with an answer to the iPod, four years for the iPhone (after initially laughing at it), it looks like Microsoft will be years late to the tablet market too... For a company with the resources of Microsoft (both manpower and money) there is no excuse for them to be so late to the market every time. Microsoft spends $9.5 billion on R&D each year and what do they have to show for it?

J Allard would've been a good replacement IMO but he left the company last year.
 
Tron 2.0 said:
I am not a Ballmer fan by any definition, but he has to be annoyed that the company is making as much money as it is and the stock is trading so low.


Apple is going to bring in over 100 billion this year and has quarterly revenue growth of 83 percent and profit growth of 95 percent.

That is why the price of MS stock is stagnant: the company isn't growing or becoming more profitable. They seem to have plateau'ed.
 

Tron 2.0

Member
Orellio said:
Pardon the ignorance but how is that even possible? Judging the graphs everyone is posting, wouldn't it still be about 100k?
Ten years ago the stock was trading at ~$35. Yesterday it closed at $24.19.
 
Polari said:
Makes sense. I don't think history will be kind to Ballmer. Under his leadership, Microsoft have been embarrassed time and time again. By Apple, by Google, by Mozilla, even by (god forbid) Nintendo.

Windows has stagnated pretty horribly. You look at the advances made in the same period of time by Apple and desktop Linux and you realise the extent to which the rot has set in. Windows 7 is a decent product, but it really represents where Windows should have been three years post-XP, not eight.

Windows Phone 7 is a great product that's simply too late. They let development stagnate and now they're paying the price.

There's barely a part of their business in which Microsoft isn't losing market share. Although desktop Linux has seen limited success Apple's market share is growing (who would have guessed that would true 10 years ago?). Apache (and therefore LAMP) is growing at a faster rate than IIS. IE has slipped from almost complete dominance of the web browser market to around 60%, once again because development stagnated. WP7 is stillborn. Google Docs is going to pose a real threat to Microsoft Office over the next few years.

It's time for a change, Microsoft need an innovator who understands software development. In Ballmer they have neither.
I agree with everything but your assessment of Windows. Windows 7 did show up about 3 years later than it should have, but it is a solid OS. I agree that it took them several years too long to catch up to OS X. But it is there now in most appreciable ways...and hopefully will continue moving in the right direction.
 

notworksafe

Member
Sean said:
J Allard would've been a good replacement IMO but he left the company last year.
Why do people say this? His division only has operated with a profit for the last few years, and even then it is a comparitively small one. I think a head of a larger division like Windows would be much better. Windows 7 was probably the biggest ad and consumer mindshare push Microsoft has done for an OS since 95 and it turned out really well for them in both positive mindshare and money.
 
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