Friday, March 25, 2005

Better off without Ballmer?

So would Microsoft be better off without Ballmer? Should he be

I haven't touched on this because I think that our woes are not about one
person (even the CEO) but rather about a whole mess of persons that
we can do without. But as of late, the comments here and elsewhere have been
more and more anti-Ballmer.

About two years ago, I was surfing the web after War Team and followed a
Forbes article off of MoneyCentral
various CEOs
. Ballmer got a 31% approval rating. I was in shock.
Microsoft's CEO getting such a low rating? Worse than Carly? Whoa. This was
the first crack in my rose-colored reading glasses. I was actually so mad at
such a horrible assessment of my beloved CEO that I voted with my browsers
"back" button. Come on, Ballmer doesn't only bleed the Microsoft
colors, he sweats 'em!

One comment href="

I'm not sure if it is fair to blame Ballmer for the current
state of the stock value.

I mean, what has he done or not done that
is impacting the stock?

Now, maybe this was just bait. Because, dang, the href="
169237226667511">next comment unloaded both barrels and a good swing of
an energy sword to boot:

  • along with Gates, made decisions that resulted in the
    company being found guilty of breaking the law twice(and counting)resulting
    in fines, restrictions on future conduct and incalculable loss of corporate
  • along with Gates, invested over $10B of cash in
    failed telecom investments that ended up being written offf
  • failed
    to make any meaningful investments at the bottom of the market crash when
    numerous companies were available for cheap, MSFT had tons of cash and other
    smarter CEO's were taking the opp to make their companies
  • invested $10B's in various "emerging" businesses
    that even years later represent only about 10% of MSFT's revenue, aren't
    growing at even 10% (in BSol's case, not growing at all) and collectively
    aren't profitable
  • taken huge charges against earnings for options
    expenses and related most of which has gone not to average emps but to the
    snr most mgt who in many cases have failed to deliver and yet bail on their
    shares at every opportunity (basically a non-performance performance bonus).
  • as a result of several of these, has allowed the company to go FIVE
    years w/o increasing earnings despite revenue having grown by 50% (last time
    I checked, stock prices are a reflection of earnings)
  • approved the
    onerous Licensing 6 program when many companies were hurting economically
    thereby pissing off a good portion of our customers and fueling the move to
    Open Source.
  • has been at the helm as MSFT failed to take security
    seriously and then has had to drop everything to play catch up, missed the
    paid search move and had to play catch up, missed the move to web services
    and had to play catch up, missed the portable music wave and had to play
    catch up, let IE stagnate and had to play catch up, and now seemingly can't
    ship any major product on time even stripped of formely core features (can
    you say Longhorn, CRM, SQL, VS, etc. etc. etc?).
  • has been at the
    helm as MSFT's overall growth has slowed from 20-30% to less than 10% and
    forecast to slow further with no seeming end in sight.
  • despite the
    stock having lost 50% over the past 5 years, approved/promoted the $32B
    payout plan when virtually every expert suggested that doing an accretive
    acq, a larger buyback or increasing the ongoing dividend would all be better
    for the stock -with the subsequent catastrophic results.
  • as a result
    of all this, has basically lost the confidence of Wall St and investors, who
    no longer see MSFT as well managed/positioned/aggressive but rather poorly
    managed/increasingly poorly positioned and always playing catch up. Hence
    the massive recent sell-off, the new 52-week low, the historically low P/E
    and the current 30% discount to its peer group which if anything is getting
    wider. Indeed, I think the prevailing sentiment has gone from "MSFT is
    solid, it's only a matter of time until they rebound" to "Is this
    company done?". There have even been several articles in the popular
    press recently making exactly that case.

    Can I stop now or would you
    like more examples? Not questioning his desire, but the facts suggest that
    he may not have the ability/judgement required and sometimes simply making a
    change can shake things up for the positive. One thing is for sure, weakness
    breeds more weakness in companies, stocks, etc. So either we start showing
    we're not done and start [positively] surprising people with our products,
    business moves, results, etc, or else those doubting us are likely to be
    proved correct.

The stock is in a piss-poor state of affairs right now. It would be good
for senior management to come out and address the current reality of the
stock and the analysts views that things aren't rosy and even when we do
release Longhorn that it most likely won't be much of a boost to the stock.
Things are not destined to get better anytime soon. MSN paid search, while a
good idea, is only going to help the stock price from skidding below the
mid-20s and just plain hold the line, not make it rocket off into the

But if the approach to lack of interesting products is to start talking
up Blackcomb and all the cool whizzy features we'll be releasing then, well,
you can be sure that this rhetoric is best accompanied by the band playing
on the sinking Titanic.

We're getting ready to go through a rough haul and it's going to take a
lot more than towel cut-backs and office-supply consolidation. We need a
massive reorganization and a nice, big-fat trimming of staff, worldwide.
Those that are left can roll-up their sleeves and impress the hell out of
the world.

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