Analyst View: Ballmer era set to end for Microsoft

Reuters

Microsoft Corp said on Friday that Chief Executive Officer Steve Ballmer would retire within the next 12 months, once it has selected a successor, sending its shares up almost 9 percent.

The following is reaction from analysts to the move.

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SID PARAKH, MCADAMS WRIGHT RAGEN ANALYST

"This was a surprise, especially considering how close it is to the recently announced strategic overhaul towards devices and services."

KIM CAUGHEY FORREST, SENIOR ANALYST, FORT PITT CAPITAL GROUP

"I'm surprised. My first gut reaction is that it came out of the activist investor effort Value Act. The timing seems very odd.

Regarding the stock rise on the news: "That's a real buzz fill for him. It's not ego boost.

"As much as people would like to blame Steve Ballmer for the fortunes of the company, I think it's the silos. I thought they had great products, but they should have worked better together and leveraged common foundations. Maybe that is his problem that they did it that way. But Ray Ozzie had been brought in to span across the products and that kind of flopped.

Regarding succession: "Looking across the next level of executives, there's a lot of candidates. I would be super surprised if they picked an outside talent."

ANDREW BARTELS, FORRESTER RESEARCH ANALYST ON MICROSOFT

"There are two aspects to this, the stock price and how the company has actually done. The stock price has been more or less flat since Ballmer's tenure. The board's going to look at that and say we need someone to change that.

"Where Ballmer has been correctly faulted for is the performance of Windows. Like Dell, HP and other PC makers they with Microsoft have been caught flatfooted by the shift to tablets.

"One can argue that Ballmer as CEO was in part responsible for that failure. Then again it is a broad, systematic one. Though Microsoft has been doing better than others (in dealing with the PC decline), where Ballmer does not get sufficient credit for is the other divisions. Servers, xBox, Bing products in general have shown some success. The problem for Microsoft is its revenue primarily comes from sales to business. It should be viewed more like IBM, but is viewed as consumer like Apple.

"According to our estimates about 2/3 of revenue come from sales to business."

Regarding succession: "You obviously want someone who knows the business well and understands both divisions of business and consumer. You also want someone who would be bold enough to split the company, split off windows, run that as one business and keep the other part as a separate business. That's one way a bold CEO could come in and say we are being penalized by being compared to Apple. That's going to be a tough sale especially with Bill Gates as overhead."

(Reporting by Nicola Leske, Liana Baker and Bill Rigby; editing by Edward Tobin)