Microsoft (NASDAQ:MSFT) CEO Steve Ballmer will retire sometime within the next 12 months, the company announced today. Shares shot up 8% in morning trading following the news and were up more than 6.5% as of this writing.

Ballmer will stay on until a successor is chosen, the company said, to "lead Microsoft through the next steps of its transformation to a devices and services company ..."

"There is never a perfect time for this type of transition, but now is the right time," Ballmer wrote in an internal email to Microsoft employees. "We need a CEO who will be here longer term for this new direction."

Microsoft's board of directors has appointed a special committee to direct the process of choosing the company's next CEO. That committee will include Microsoft's founder and chairman, Bill Gates.

"We're fortunate to have Steve in his role until the new CEO assumes these duties," Gates said in the company's statement.

Ballmer joined Microsoft in 1980 as the company's first business manager, five years after the company was founded. He succeeded Gates as CEO in 2000. His previous positions with the company included vice president of sales and support, senior vice president of systems software, and vice president of marketing.

Ballmer met Gates in 1973 while they were living down a dormitory hall from each other at Harvard University.

"This is an emotional and difficult thing for me to do. I take this step in the best interests of the company I love; it is the thing outside of my family and closest friends that matters to me most," the 57-year old Ballmer wrote.

It's been less than two months since Microsoft announced a sweeping reorganization of its business in an attempt to reignite competition with faster-moving rivals such as Apple and Google.

Response to the newest version of Microsoft's flagship Windows operating system has been lukewarm. And Microsoft, along with other companies that thrived in the era of personal computers, are scrambling to transform their businesses as people come to rely more and more on smartphones and tablets.

-- Material from The Associated Press was used in this report.

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