It made perfect sense for Bill Gates to be replaced as CEO of Microsoft (MSFT), and renamed Chief Software Architect. Gates is a technology guy, not a traditional business executive. When you surpass General Electric (GE) as the most valuable U.S. company, as Microsoft did back in the technology stock hey day, you should have people focusing on their core competencies. For Gates, that was software.
In stepped Steve Ballmer to take over as CEO. How is he doing? Horribly, if you ask me. Now I don't own Microsoft stock (thank goodness), but if I did I would be infuriated. The shares have done nothing in 8 years. They trade in the low 20's, same level they were in 1998. Any investor will tell you that shareholders can share in the success of a public company in two ways, through share price appreciation, or through the return of capital.
For some reason, however, Ballmer does not particularly like either one of these forms of building shareholder wealth. Microsoft has nearly $35 billion in the bank and another $10 billion or so in investments just sitting on their balance sheet collecting dust. It's like he doesn't care about the shareholders one bit, despite the fact that they own the company and he works for them.
And that is why I think he should be fired. That doesn't mean he needs to leave Redmond entirely. Rather, orchestrate a similar migration to the one Gates embarked on several years ago. Ballmer's core competency clearly isn't working for the shareholders as CEO, so he should be working for someone else, his successor.
Not only has Ballmer been completely unfriendly to shareholders since he took over, he doesn't seem to care that they are upset with Microsoft's huge cash balance. When asked about the issue Ballmer told investors and analysts "It is likely I will continue to have to discuss with you for many years why we have as much cash as we do."
That quote says two things. One, we will continue to treat shareholders like crap. And two, he obviously thinks that it is a chore to "have to" have these discussions, proof that has no idea who he is working for or what his objectives should be.
Ballmer will likely try to make the case that they need all of that cash to invest heavily in R&D. Anyone who has paid attention to Microsoft in recent years knows that they are not doing much innovating at all compared with their competitors. The majority of their income still comes from Windows and Office. Their other ventures, like XBox for example, are losing money.
Most of what is going on in Redmond seems to lack strategic sense. Why are they in the video game business anyway? Why do they own billions in Comcast stock? Why do they have a bank account with $35 billion in it? It's no wonder Microsoft stock has done nothing for 8 years. If shareholders ever want to make decent money on their MSFT stock, they are going to have to fire Steve Ballmer.