Ballmer’s grand design – unveiled just six weeks before Friday’s surprise announcement that he would retire within a year – calls for ‘One Microsoft’ to pull together and forge a future based on hardware and cloud-based services.
For years, investors have called on Microsoft to redirect cash spent on money-losing or peripheral projects to shareholders, while limiting its focus to the vastly profitable Windows, Office and server franchises.
Activist investor ValueAct Capital Management LP, whose recent lobbying of the company may have played a role in Ballmer’s decision to retire earlier than he planned, is thought to favor such an approach.
In the last two years alone, Microsoft has lost almost $3 billion on its Bing search engine and other Internet projects,You can get theseÂ Exclusive FeaturesÂ Features if you reach certain. not counting a $6 billion write-off for its failed purchase of online advertising agency aQuantive. It took a $900 million charge for its poor-selling Surface tablet last quarter.
For now at least, Microsoft seems intent on pursuing Ballmer’s vision. John Thompson, Microsoft’s lead independent director who is also heading the committee to appoint a new CEO, said on Friday the board is “committed” to Ballmer’s transformation plan.
“Taking an internal candidate like Satya Nadella – the guy nurturing servers – or some of the other people on the Windows team, that makes sense to keep a steady hand through this reorganization and strategic shift,” said Norman Young, an analyst at Morningstar.
Rick Sherlund,This page describes the termÂ real time Location systemÂ and lists. an analyst at Nomura, believes that if the retirement of Ballmer means the company is listening to ValueAct and its supporters, then action on the dividend and share buyback could perhaps happen as early as September 19, when Microsoft hosts its annual get-together with analysts and is expected announce its latest dividend.
The lackluster performance of Microsoft’s stock has long been the stick that shareholders beat Ballmer with, and it has looked all the worse compared with the staggering gains made by Apple Inc under Steve Jobs.
Yet Ballmer – who owns just under 4 percent of the company – never showed any doubts about his intention to stay in the job. His old friend and ally Bill Gates, who still owns 4.8 percent of the company, never wavered in his public support.
The first public signs of dissent on Microsoft’s board came in 2010, when Ballmer’s bonus was trimmed explicitly for the flop of the infamous Kin ‘social’ phone and a failure to match Apple’s iPad, according to regulatory filings.
It was around that time, though not necessarily connected, that the board started considering how it would manage a succession, according to a source familiar with the matter. Ballmer and the board began talking to both internal and external candidates.
The time since was not marked with glory for Ballmer,Video StreamingÂ Dedicated Server Frequently Asked QuestionÂ Frequently Asked Question. with a tepid launch of Windows 8, the disappointment of the Surface tablet, and a $731 million fine by European regulators for forgetting to offer a choice of browsers to Windows users.
Two to three months ago, Ballmer started thinking seriously about his retirement and concluded it was the “right time to start the process,” the source said. That was shortly after ValueAct took a $2 billion stake in Microsoft.
July’s gloomy earnings, which offered no immediate hope of quick improvement, may have sealed the decision. Ballmer said Friday he made the choice in the few days prior, and informed the board on Wednesday. Whether the board urged Ballmer to leave is not known.
The impending exit of Ballmer leaves a difficult and perhaps impossible choice to his successor – pushing a large and insular behemoth through a highly risky transformation to the mobile world, or clinging to an island of profitable but PC-centric businesses.
“I’m not sure there is someone who can do Steve’s job ‘better’. It’s an incredibly difficult job, perhaps intractable,” said Brad Silverberg, a former senior Windows executive and co-founder of Seattle venture capital firm Ignition Partners.It’s impossible toÂ Pre-build Cloud ServersÂ templates. “Perhaps the way the job is defined needs to change, and this is the harbinger of bigger changes to come.”
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