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Liberum Management Change

CEO Watch – Steve Ballmer, Microsoft

June 07, 2010

We have resisted putting Steve Ballmer, Microsoft’s MSFT (NASDAQ) CEO, on the Liberum CEO Watch List for sometime now.  Ballmer’s ongoing startling statements about Microsoft and the industry along with his lack of innovation over the last number of years has begun to be examined by a number of specialists in the field.  Rumors even are hearSteve Ballmer, CEO of Microsoftd about bringing Bill Gates back.  While it is hard to believe Ballmer is really at risk, maybe he should be.  Just today, Adam Lashinsky, the Senior Editor for Fortune wrote a piece in which he said,

One year stock performance of MicrosoftHe (Ballmer) is presiding over the umpteenth reorganization of the company he has run for years, having succeeded his pal, Bill Gates. His online business, whose Bing search engine is making modest gains against industry leader Google, lost more than $700 million last quarter.

Yet here was Ballmer traveling down a semantical rabbit hole over the future of the PCs. In Ballmerworld, it doesn’t matter that the PC is shrinking in relevance. Any device is a computer, and people will want to use Windows because they’re so familiar with it. By the way, Windows 7, Microsoft’s latest release, is crushing it, further proof that computer users love Microsoft.

CEOs certainly are paid to put on a happy face and represent as well as possible. But hearing Ballmer at the Wall Street Journal’s D conference left me with one question: What is the guy smoking? Windows 7 has been a “success” in part because Microsoft’s previous effort, Vista, was such a stinker. Businesses the world over held off so long on upgrading their PCs that once Microsoft got it right they had no choice but to start replacing obsolete equipment.Semantics aside, Ballmer knows as well as anyone that the future of personal-computer industry is in mobile devices. Here, Microsoft’s hand is so weak that its most important global equipment partner, Hewlett-Packard (HPQ), is buying a beleaguered smartphone maker, Palm (PALM), for its superior mobile operating system.

Ballmer really needs to show he understands his marketplace and his competition and how he expects to deal with it.  So far, in this regard he has been a dismal failure.  Under his tutelage the stock has not really shown much shine either.Stay tuned.


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