As Executives Flee, Is Microsoft Falling Apart?

Can Microsoft (Nasdaq: MSFT  ) afford to lose any more of its figureheads?

In the span of about six weeks, Mr. Softy lost two brand-name business leaders as business division president Stephen Elop eloped to become CEO of Nokia (NYSE: NOK  ) and cloud computing table-pounder Ray Ozzie announced his retirement. Like Elop, Ozzie was never universally liked but nevertheless represents a huge chunk of the creative power at Microsoft's disposal. When you're going head to head with exceptional business leaders like Steve Jobs of Apple (Nasdaq: AAPL  ) and the Larry-Sergey-Eric triumvirate of Google (Nasdaq: GOOG  ) , these defections hurt.

Ozzie's departure gives CEO Steve Ballmer an excuse to grab more power for himself: The role of chief software architect will not be backfilled when Ozzie leaves. Bill Gates is still chairman of Microsoft's board but seems content to let Ballmer cut and deal the executive deck as he pleases. I'm not sure that's a good idea, given Ballmer's insistence on running Microsoft as an e-business that he doesn't appear to understand -- for evidence of this, look at the failed takeover of Yahoo!, the just-adequate Bing search project, the fall of his pet Internet browser, repeated failures to make a dent in the digital music market, and more.

Like Yahoo!'s Carol Bartz, Ballmer is in dire need of top-notch support in the upper echelons of his management structure, and like Bartz, he's only losing the talent he's got available. The main difference is that Microsoft is many times the size of Yahoo! and stands to destroy a lot more shareholder value if the ship is allowed to sink.

Maybe it's time to replace Ballmer himself -- cauterize the wound while there's still time, then hire a qualified replacement from a winning organization such as Google, IBM, or Apple. Or is it already too late to stem the tide washing Microsoft out to sea?

Fool contributor Anders Bylund holds no position in any of the companies discussed here. Google, Microsoft, and Nokia are Motley Fool Inside Value selections. Google is a Motley Fool Rule Breakers pick. Apple is a Motley Fool Stock Advisor recommendation. Motley Fool Options has recommended a diagonal call position on Microsoft. The Fool owns shares of Apple, Google, International Business Machines, and Microsoft. Try any of our Foolish newsletter services free for 30 days. True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. You can check out Anders' holdings and a concise bio if you like, and The Motley Fool is investors writing for investors.

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  • Report this Comment On October 19, 2010, at 5:30 PM, Gonzhouse wrote:

    MSFT will still make tons of money as long as laptops and desktops are viable devices. But they are not on the cutting edge of technology anymore; that has been taken over by Google, Apple, etc. MSFT isn't falling apart as much as it is just a dull, boring value play.

  • Report this Comment On October 20, 2010, at 12:14 PM, ragrillo wrote:

    I believe MSFT has become an introspective organization that lost touch with the consumer. I make an extensive analysis in the following article:

    http://investbyads.blogspot.com/2010/09/embracing-zeitgeist-...

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