Ballmer Ouster Coming?

By Reuters  |  Print this article Print

Microsoft is entrenched in business and consumer consciousness as the company that owns the Windows OS and the Office productivity suite. But Apple has made serious inroads recently, capturing the imagination of both business and consumers with its iPad tablet device. Is Microsoft's efforts to protect its core markets hampering innovation? Some say yes.

Such talk is not new. Throughout Ballmer's 10-year stint as CEO, he has faced doubters. But some detect a heightened urgency. An anonymously sourced report in The Daily Beast blog this summer claimed a cabal of Microsoft executives was plotting to overthrow Ballmer, although it provided no evidence.

Insiders dismissed the report as implausible. "Steve brings a unique set of capabilities to running a very broad and complex set of businesses," said Frank Shaw, in charge of Microsoft's corporate communications. "The company is well positioned for growth and I'm excited for everything we are delivering this fall."

Ballmer was not available for an interview. But he did make it clear at a conference last week that he still has a passion for the job and has no plans to step down soon. "If I ever thought there was a day where the company would be better off without me, I'd leave that day," he told the audience. "The day I think somebody else can do it better would probably be the day I would decide to move."

But dissatisfaction among investors and employees about Ballmer's reign appears to be growing stronger. "The market in general is not positive on Ballmer, and some of that is not appropriate, but it is present in the stock price," said Allen at T. Rowe Price.

Part of the friction may spring from Ballmer's inherently long-term view after 30 years at the company. "His time horizon is much longer than investors' time horizon," said Allen. "If his time horizon is 10 years, investors' is six-to-12 months. So decisions he's made, in a lot of cases, investors would have preferred otherwise."

Consensus among insiders and company-watchers is that Ballmer is not going anywhere until his old friend and business partner Gates wants him to.

"As long as Bill wants Steve to be CEO, Steve will be CEO, it's as simple as that," said Brad Silverberg, a former Microsoft executive who co-founded venture capital firm Ignition Partners.

There's no evidence that Gates -- still the company's largest shareholder with 7.2 percent -- is any less confident in Ballmer now than at any other time, said Silverberg, who ran Microsoft's Windows business between 1990 and 1995 and went on to lead the company's Internet efforts and its Office business.

Other former executives say Ballmer has carried out his mandate of protecting the company's main businesses, and there is still no one better to run Microsoft. "I have seen Steve Ballmer first hand -- he knows this business better than anyone alive," said Dodge at Google. "His blind spots are very minor compared to what he does know and see. Everyone who meets Steve comes away impressed with his passion, knowledge, and honesty."

At this point, Ballmer is not in it for the cash. He was paid only $1.35 million last fiscal year, well below the $7.5 million mid-point for CEOs of the Standard & Poor's 500, according to executive compensation research firm Equilar. He only got half his available bonus this year, mostly because of failures in the phone and tablet market, according to the firm's latest proxy filing.

Microsoft stopped issuing stock options in 2003, and Ballmer gets no stock awards at his own request. Not that he needs them. Ballmer is the second largest shareholder in Microsoft, owning 4.75 percent of the company, making him the world's 33rd richest person, according to Forbes.