Hedge fund star calls for Microsoft's Ballmer to go

NEW YORK Wed May 25, 2011 7:51pm EDT

Microsoft Corporation Chief Executive Officer Steve Ballmer gestures during the McGraw-Hill Media Summit in New York, March 19, 2009. REUTERS/Shannon Stapleton

Microsoft Corporation Chief Executive Officer Steve Ballmer gestures during the McGraw-Hill Media Summit in New York, March 19, 2009.

Credit: Reuters/Shannon Stapleton

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NEW YORK (Reuters) - Influential hedge fund manager David Einhorn has called for Microsoft Corp Chief Executive Steve Ballmer to step down, saying the world's largest software company's long-time leader is stuck in the past.

Microsoft, which was the largest U.S. company by market value in the late 1990s, has seen its stock stand still for the past 10 years as it failed to attack new Internet and mobile computing markets, surrendering leadership of the tech sector to Apple Inc.

Microsoft shares shot up 0.87 percent in after-hours trading, the most of any Dow Jones industrial average component.

Many have been privately critical of Ballmer, but Einhorn's remarks are the most pointed yet from a high-profile investor.

Einhorn's Greenlight Capital hedge fund has been a recent buyer of Microsoft stock, which at under 10 times expected earnings is regarded by many as undervalued.

Greenlight currently holds about 9 million shares in Microsoft, or 0.11 percent of the company's outstanding shares, according to Thomson Reuters data.

Speaking at the annual Ira Sohn Investment Research Conference in New York on Wednesday, Einhorn said it was time for Ballmer -- who succeeded co-founder Bill Gates in 2000 -- to step aside and "give someone else a chance."

"His continued presence is the biggest overhang on Microsoft's stock," he said.

On Tuesday, Microsoft was overtaken by IBM in market value for the first time in 15 years, chiefly because of its static shares. Apple roared past it last year to become the world's most valuable tech company.

An investor who put $100,000 into Microsoft stock 10 years ago would now have about $69,000 worth.

Einhorn, the president of Greenlight Capital, which had $7.8 billion of assets as of January 1, first rose to prominence for making a prescient call on Lehman Brothers' accounting troubles before the bank's subsequent collapse.

Shares of Microsoft edged up 0.87 percent to $24.40 in afterhours trade from a regular-session close of $24.19.

(Reporting by Bill Rigby, Svea Herbst and Edwin Chan; Editing by Steve Orlofsky and Lisa Shumaker)

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Comments (23)
PwlM wrote:

May 25, 2011 8:09pm EDT  --  Report as abuse
majkmushrm wrote:
It’s not really Ballmer’s fault. He took over from Gates just after their business model was destroyed by the DOJ, even if they weren’t really punished for it. Their business model was to produce crappy products and strong arm the competition with monopolistic practices. They tried to continue that business model for a couple of years after their conviction but, to its credit, the DOJ batted them back.

If they can’t cheat, how are they going to compete? They’re still trying to figure that out. It doesn’t help that they have a bad rep and haven’t figured out that they’re supposed to be a software house. If I go to Oracle, I can buy an RDBMS that runs on Windows, Linux, Unix, and IBM mainframe OSs. Microsoft makes a premier office software suite that I love but I won’t buy it. I own an Apple and, even though they make a version of Office for Apple (but not for any other OS), I know they won’t keep it up to date and it’s much more expensive than other office packages I can buy. The only version of their software they keep up to date is the Windows version. They still haven’t shaken the monopolist’s mindset. Furthermore, I don’t think that they are going to be allowed to shake it as long as Uncle Bill is alive.

May 25, 2011 8:38pm EDT  --  Report as abuse
jscott418 wrote:
I have to agree. I think at the very least Balmer is not very good at selling Microsoft. He comes off all wrong. I am not a huge fan of Steve Jobs, but he is a very good salesman for Apple. He is also very involved in making products the best they can be. In other words Microsoft needs a better salesman.

May 25, 2011 8:45pm EDT  --  Report as abuse
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