Microsoft CEO Steve Ballmer announces plans about Xbox at CES 2010. Photo: Jon Snyder/Wired.com
Some people call him the Monkey Man. His goofy public appearances have provided millions of YouTube viewers with endless entertainment. And under his leadership for the past 11 years, Microsoft?s performance in the stock market has been limp.
That?s Microsoft CEO Steve Ballmer, everyone. And one high-profile investor is sick of him.
David Einhorn, a major hedge-fund manager, on Wednesday called for Ballmer to step down and ?give someone else a chance.?
?His continued presence is the biggest overhang on Microsoft?s stock,? Einhorn said?at the Ira Sohn Research Conference.
Ouch. Plenty of people have called for Ballmer?s ousting for years, but a call to resign from Einhorn, president of Greenlight Capital, who owns 9 million shares of Microsoft (0.11 percent of its shares), may be the harshest attack yet against the CEO.
Still, Microsoft?s board supports Ballmer despite Einhorn?s recommendation, according to a Reuters report. Ballmer?s critics have a point. From stagnant stock performance to the lack of a credible tablet strategy, Microsoft has lost its bleeding edge as a technology leader. To be fair, the company is still enormous and valuable and even though there?s been no MSFT stock price appreciation in a decade, the company does pay a 16-cent dividend.
Microsoft is not going anywhere ? but that phrase has two meanings.
What follows are some examples of how Microsoft fell behind in the technology industry under Ballmer?s leadership.
Behind in the Smartphone Game
When Apple first released the original iPhone, Ballmer laughed at the device.
?That is the most expensive phone in the world, and it doesn?t appeal to business customers because it doesn?t have a keyboard, which makes it not a very good e-mail machine,? Ballmer said in a January 2007 interview with CNBC. ?I kinda look at that and I say, well, I like our strategy. I like it a lot.
Just two years later, Microsoft?s Windows Mobile lost a third of its market share in the wake of the iPhone. Ballmer wasn?t laughing anymore.
?We were ahead of this game and now we find ourselves No. 5 in the market,? Ballmer said at an All Things Digital conference in 2010. ?We missed a whole cycle.?
Microsoft in late 2010 relaunched its complete do-over of a mobile OS, Windows Phone 7. And after slow initial sales, the company also formed a major partnership with floundering phone maker Nokia, in which the two companies agreed to ship Windows Phone 7?powered Nokia devices by 2012 or 2013. We?ll find out later if this will be enough for Microsoft to catch up.
Software Leaser
While sales of?Microsoft?s Xbox game console are on a healthy rise, the majority of Microsoft?s revenues come from?sales of Office and Windows. (Yawn.) That essentially makes Microsoft look like a boring software-leasing company, not a technology leader.
No Tablet Strategy
Where?s Microsoft?s response to the iPad? Google?s managed to whip up a few, with manufacturers selling tablets running Android. And hundreds of smaller companies are already selling tablets.
Microsoft, to date, hasn?t announced a credible tablet strategy. It?s unclear whether Microsoft?s answer for a tablet OS is Windows for desktop or Windows Phone 7 ? Ballmer went ahead and blurted out something about Windows 8 for tablets, but Microsoft soon retracted his statement. Clumsy.
At this rate, by the time Microsoft announces a solid, tablet operating system, we?ll probably be playing with fourth-generation iPads.
Playing Catch-Up in Search
Microsoft?s Bing was a small player alone in the search game, so the company teamed up with Yahoo. Now that Yahoo is Bing-powered, Bing has a bit less than 30 percent of the search market. While that?s a substantial chunk of the market, Google?s still pulling ahead in search, as reported here by Ryan Singel.
Stagnant Stock
Microsoft?s stock has hovered between?$25 and $30 per share for the majority of the past decade. While the company is still filthy-rich, its stagnant stock allowed smaller rivals to catch up and surpass it.
First, that allowed Apple to surpass Microsoft in market value last year. And on Tuesday, IBM surpassed the company in market value as well. No wonder Einhorn?s peeved.
Source: http://www.wired.com/epicenter/2011/05/steve-ballmer-einhorn/
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