Is It Time for Ballmer to Go?

Editor's note: A previous version of this article misidentified David Einhorn of Greenlight Capital. The Fool regrets the error.

Microsoft (Nasdaq: MSFT  ) hasn't been getting a whole lot of love from investors in recent years, and now its fiery CEO is under fire.

Greenlight Capital's David Einhorn took jabs at Steve Ballmer during yesterday's Ira Sohn Conference, as retold by The New York Times' DealBook blog.

The match-lighting hedge fund manager believes that it's time for Ballmer to give someone else a shot at running the world's largest software company. He took Microsoft's helmsman to task for being out of touch with emerging trends and squandering the cash-rich company's money on ill-advised acquisitions.

Ballmer's an easy target these days. He's been at the helm throughout Microsoft's lost decade, a time that has seen Apple (Nasdaq: AAPL  ) shares appreciate several times over.

Einhorn criticizes Ballmer for what he has done -- including taking on Google (Nasdaq: GOOG  ) in search through Bing -- and what it has failed to do, by letting Apple corner the tablet and portable media player markets.

I don't think Ballmer is the problem, and anyone that has read what I have to say about Mr. Softy over the years knows that I am no bull on Microsoft.

In a nutshell, Microsoft will never be the company it used to be -- but that fate doesn't owe to anything that Ballmer did, or that anyone could have done differently. Microsoft will never be great again because potentially irreversible market trends are working against its bread-and-butter business.

Google has found ways to popularize free operating systems for mobile, tablets, and now computers, and it's attacking Microsoft's Office stronghold with free cloud-based productivity software. Every passing year will make Microsoft less able compete with its premium Windows and Office programs. Is that Ballmer's fault? I think Ballmer actually deserves credit for growing Microsoft's revenue, despite the heavy headwinds blowing into Redmond.

Did Microsoft's Zune come too late to challenge Apple's iPod? Yes, but what about companies including SanDisk (Nasdaq: SNDK  ) and Creative, which got their earlier and still failed to challenge Apple? Microsoft's Surface and Hewlett-Packard's (NYSE: HPQ  ) TouchSmart were ahead of their time before Apple popularized touchscreen computing with the iPad last year.

Apple is the world's most valuable tech company for a reason. You could ask every lesser company why it can't be more like Apple, but posing that questions doesn't mean that those businesses should can their CEOs.

Ballmer's trying, as you can see in the deals and acquisitions that have left Einhorn and others like him shaking their heads.

I actually applaud Ballmer for digging deep into Microsoft's coffers to get Yahoo! (Nasdaq: YHOO  ) to back Bing, and Nokia (NYSE: NOK  ) to back Windows Phone 7. Bing is now a legitimate -- and undisputed -- silver medalist in search. Having the world's leading handset maker championing its smartphone operating system can also only help it in this uphill battle.

It's easy to criticize Ballmer, but what would any other CEO have done differently? Microsoft doesn't need a new CEO to woo back investors. It needs a time machine. Last I checked, even Apple isn't working on one of those.

Is it time for Steve Ballmer to go? Share your tips in the comment box below.

The Motley Fool owns shares of Yahoo!, Microsoft, Apple, and Google. Motley Fool newsletter services have recommended buying shares of Microsoft, Google, Apple, and Yahoo!. Motley Fool newsletter services have recommended creating a diagonal call position in Microsoft. Motley Fool newsletter services have recommended creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Longtime Fool contributor Rick Munarriz still does most of his computing via Microsoft's wares. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 26, 2011, at 7:37 PM, Emperor2 wrote:

    CLUELESS BALLMER MUST GO. I cannot believe you are being an apologist for Ballmer. I'm a retired Colonel and one thing I was taught very early in my military career was a leader, from a squad leader to the Chief Of Staff, is responsible for all their organization does or fails to do. Ballmer has failed miserably. CLUELESS BALLMER MUST GO.

    Steve Jobs operated in the same environment as Ballmer but Jobs changed his companies focus to take advantage of today's reality in the world. When Apple introduced their first phone, Ballmer, in a typical example of his cluelessness, stuck his bald head in the sand and predicted Apple would shut down their phone division in 2 years. He also mentioned that he was glad Microsoft was smart enough to not do something as stupid as Apple had done. CLUELESS BALLMER MUST GO.

    For you to say anything even remotely positive about Ballmer is a disservice to Fools. Investors in Microsoft over the last 10 years would have been better served hiding our money under our mattress. CLUELESS BALLMER MUST GO.

    And cluless Rick Aristotle Munarriz shouldn't be far behind him.

  • Report this Comment On May 26, 2011, at 7:56 PM, goscuderi wrote:

    It's easy to say that technological headwinds and sea changes in trends have held Softy back; however, at the same time any CEO must take responsibility for his company's situation. Certainly there are currants beyond Ballmer's or anyone else's control, but that isn't the point that people like David Einhorn are making. The point is that a different CEO may have handled things differently and that it is past due for a change of that magnitude at Softy. Where I disagree with Einhorn is that it may actually be too little too late anyway.

  • Report this Comment On May 26, 2011, at 10:45 PM, militauro wrote:

    I'll use a basketball analogy to summarize my thoughts on this. Microsoft has great defense, but sometimes the other teams just have better offense. Apple is genius at what it does and Microsoft (along with most everyone else) simply couldn't match. In other words, Microsoft is losing this battle not because its not that good, it is because others are too good and even better (Apple for phones, Google for search, etc.).

    Microsoft needs a homerun, not a new CEO.

  • Report this Comment On May 26, 2011, at 11:27 PM, fatmonk wrote:

    Balmer need to explain to investors:

    1. Bill had showed off touch screen tablet more than 10 years ago.

    2. WinMobile was there long before iPhone.

    3. 10 years ago MSFT market cap was about 10 x of Apple.

    As long as, Balmer is a CEO, GOOG may pass MSFT in Market cap.

  • Report this Comment On May 27, 2011, at 9:41 AM, techy46 wrote:

    CEOs are not responsible for popularity of an enterprise and stock prices. CEOs are responsible for the financial success and operating fundamentals of an enterprise. In that respect, Steve Ballmer has been successful. Microsoft is not the worlds most popular consumer technology company it is the worlds most popular information technology software company. An enterprise can make tons of money and e a good investment without being the politically and socially correct winner; AT&T, Dell, Exxon, IBM and Microsoft are all examples of this. Microsoft has created an ecosystem that has allowed thousands of enterprise and millions of IT workers to increase the productivity and success of all. Apple has created an ecosystem that allows millions of technically challenged people to more easily use technology. They're both good investments and successful enterprises.

  • Report this Comment On May 27, 2011, at 9:55 AM, riskmaven wrote:

    Get real people. It is the responsibility of a tech CEO to lead their ships through changing waters--that's why they're paid so well. Ballmer should have been tossed out two years ago when it was clear he couldn't bring or buy products to market and his only defense was "the rest of the world doesn't get it." The Board needs to be cleaned out too.

    A legacy installed base makes it nearly impossible, from a cost effectiveness viewpoint, for corporations to move to a new environment... it takes years, decades to change... so Microsoft has been nothing more than a legacy revenue-generating machine for several years. The key is how much revenue has come from their installed base's legacy products/services vs. new sources. So watch this space... the dam is starting to crack: corporate employees are insisting on the new tools and technology. The sad part of us shareholders is that Microsoft has had a captive corporate and consumer audience... and they haven't leveraged.sold into it as they should have. Microsoft needs a leader who understands the new market realities and we shareholders must insist on it.

  • Report this Comment On May 29, 2011, at 10:49 AM, Samfund wrote:

    Ballmer leaving needs to happen to unlock shareholder value....http://seekingalpha.com/article/270250-the-ballmer-discount-...

  • Report this Comment On June 07, 2011, at 4:24 PM, ichbinhxm wrote:

    Not only Balmer MUST GO - every minute too late!

    Many of his entourage must as well go! they have gotten too fat (specially brain wise) to think logically & TOO RICH to care about share holders' interest; Balmer also suffers - I think- from an ego syndrome. What has he done except WASTE resources on buying junk at antique prices. GET RID OF HIM & HIS TEAM!

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