Another day of losses for U.S. stocks makes it three out of four days this week, with the S&P 500 (^GSPC 0.95%) and the narrower, price-weighted Dow Jones Industrial Average (^DJI 0.60%) losing 0.7% and 0.6%, respectively, on Thursday.
Consistent with that drop, the VIX Index (^VIX 0.00%), Wall Street's fear gauge, rose more than 6%, to close at 17.56. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)
Another executive departure -- just not the right one
On the face of it, Dow component Microsoft (MSFT 1.12%) beat the consensus forecast of $0.68, with earnings-per-share (EPS) of $0.72 in its fiscal third quarter ended March 31. However, analysts had moved the goalposts in significantly: Less than two weeks ago, on April 5, the consensus forecast still called for EPS of $0.76.
The launch of Windows 8, in particular, has been a disappointment; excluding gains from deferred revenue, the Windows unit produced no growth whatsoever. If you're familiar with Windows 8, that result might not be a surprise. I test drove the latest version of Microsoft's flagship O/S for a couple of weeks on a new laptop, and was singularly unimpressed -- I've since gone back to Windows 7. Among other things, Microsoft took a huge risk in eliminating Windows' Start button; I don't think it was an improvement.
The Redmond, WA. software firm also announced that its Chief Financial Officer Peter Klein would be stepping down at the end of June, after three-and-a-half years on the job. His predecessor in the role, Chris Liddell, lasted four-and-a-half years. Klein is the latest in a string of high-profile executive departures from Microsoft over the past few years. Despite this, one executive appears to be the proverbial "immovable object" -- CEO Steve Ballmer.
I preach a long-term approach to investing, and the software industry is a very tricky environment. As such, I've been willing to give Microsoft's leadership the benefit of the doubt. At some point, however, one needs to draw the line. Microsoft's stock first hit its current level nearly 15 years ago. Mr. Ballmer does not control the stock, of course, but that performance is not a short-term aberration. Given Microsoft's resources, both financial and human, he ought to be doing a better job of capitalizing on changes in technology and consumer preferences. Where is the unstoppable force that will remove him?