- Joshua M Brown
- August 23rd, 2013
This is very big news, Steve Ballmer is one of the last holdout CEOs of the old tech cohort and perhaps the worst one in terms of missing every single major shift and trend over the last thirteen years. Microsoft is in both the Dow and is a large weighting in the S&P 500, so it is very important to all investors. It is also still a gigantic company and its potential has been the elusive white whale for the value investor for about a decade now.
The Nasdaq has certainly had its share of ups and downs since Ballmer took over Microsoft in the year 2000, but a ton of shareholder wealth has been created by most of the tech giants that survived. Just not for Microsoft’s shareholders, they’ve always been waiting for their horse to pick up the pace and hit the turn. It never happened.
Instead, the company’s core products were leaned on to continue kicking out cashflow while tens of billions of dollars were squandered on web sites, mobile product failures and other wild goose chases. Even the successes, like XBox, were breakeven businesses at best. The amount of lost opportunity is unquantifiable – but its a huge number. Just look at the market cap gains in Google and Apple over the past decade to give yourself an idea of what’s been missed.
Ballmer’s new products were mostly duds (the Zune music player will forever live in infamy and the Surface tablet is more sad than it is funny), he couldn’t get a phone out the door either and even the updates to already-established products like the Windows OS were often seen as failures. Ballmer was the sandman of Silicon Valley, his “innovations” could put even the most ardent Microsoft enthusiasts to sleep.
The thing about Steve Ballmer is that when he said “I love this company” as he has many times (once famously bellowing the phrase during a sweat-soaked dance routine before the entire company’s employee base), you knew he really meant it. But his enthusiasm just couldn’t overcome his lack of innate genius – it’s not very easy to step into the shoes of a Bill Gates or to lead a company after it’s already innovated its way into the hall of fame. But from the outside looking in, Steve’s reign was more about his tight grasp of control than it was about what was best for the company.
Microsoft shares rallied on the news of his retirement and, of course, on the speculation that Bill Gates himself may make a comeback.
I doubt he will, but it has happened – think Jobs (Apple) and Schultz (Starbucks). Try not to think of Michael Dell and this comparison works much better
In the meantime, the Seattle Times managed to get the exit interview with Steve Ballmer, follow the link below:
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The Reformed Broker is a blog about financial markets and the economy. Joshua Brown is a New York City-based investment advisor for high net worth individuals, charitable foundations, retirement plans and corporations... More.