

"Ballmer must go", lead investor tells conference - nikcub
http://dealbook.nytimes.com/2011/05/25/ballmer-must-go-einhorn-says/

======
chubs
Some questions:

* Who would you replace him with?

* How much money do they make from enterprise vs consumer stuff?

* If they make most of their cash from enterprise, is it reasonable to criticise him for missing the phone/tablet revolution? I mean, we don't criticise jobs for missing the enterprise software market.

Just some thoughts. Maybe they're simply drifting into becoming another IBM:
all enterprise stuff, nothing interesting but certainly money to be made.

~~~
j_baker
You're correct in saying that Jobs isn't criticized for missing enterprise
software. He _is_ criticized for trying to break into it and doing a terrible
job of it though. Remember the XServe? Fortunately, he had the good sense to
can that eventually.

Unfortunately, MS doesn't seem to be as introspective. I agree that it's best
to see MS focus on their enterprise products. That requires them to... well...
focus on their enterprise products rather than continuing their half-assed
attempts to make consumer products.

~~~
cookiecaper
Everything Microsoft does is about the domination of Windows and Office. These
are their big moneymakers and they don't want to give them up. Are you sure
that a royalty of $50 for practically every single PC manufactured in
copyright-observing nations is worth less than their enterprise software? What
about everyone that goes out and spends $100+ on a copy of Office? Those are
some big markets and I'm not sure their value is so diminutive.

Additionally, such a platform allows tight integration of things like .NET,
attracting developers to Windows' platform and allowing MS to sell dev tools
and servers. Would .NET be worth less if Microsoft's desktop share were
diminished? Almost definitely, imo.

Please don't underestimate the value of desktop dominance.

------
joshaidan
"his children were not allowed to use Google or iPods"

I find this to be the most interesting point the article makes. Perhaps the
reason why Balmer has failed as CEO is because he does not use Google. Could
your search engine of choice has any effect on the quality of your decisions?

~~~
thomasgerbe
Perhaps he should focus on making products that convince his children to
switch from Google/Apple products instead of banning them outright. They might
be a good barometer.

~~~
Luyt
This reminds me of the Broadway show producer who let his 10-year old kid
watch new productions to gauge whether he should stage them or not. The idea
was that the average audience has the same level of intellect as a 10-year old
kid, and when the kid liked something, the general audience would too.

Related, but not the same, is the monkey which throws darts at a poster on the
wall to decide which stock to buy. Who needs financial analysts?

------
ikono
I can't stand Ballmer but I don't think he's going anywhere soon. Some quick
math says that Ballmer and Gates own about a third of Microsoft combined. It'd
be very hard to push either of them out against their combined will.

And while I'm sympathetic to the notion that anyone would be better than
Ballmer, it really is hard to find a good CEO.

~~~
swombat
> _Some quick math says that Ballmer and Gates own about a third of Microsoft
> combined._

Incorrect. They own about 6.7%. See
<http://news.ycombinator.com/item?id=2587008>

~~~
jeroen
Also incorrect. They own about 10.7%. See the comment on the comment you link
to.

~~~
ikono
That's pretty fascinating. I just assumed that the majority of their net
wealth was in the form of MSFT shares. I'm now very curious what the other
2/3s of their net worth is held in.

You can see them steadily selling off shares here: [http://www.sec.gov/cgi-
bin/own-disp?action=getissuer&CIK...](http://www.sec.gov/cgi-bin/own-
disp?action=getissuer&CIK=0000789019)

~~~
cpeterso
It's very common for executives to sell shares on a regular (non-secret)
schedule to avoid claims of insider trading or false news about "Bill Gates
selling stock; MSFT must be in trouble!"

------
spencerfry
As a big investor in $MSFT, I'm not saying I don't agree with Mr. Einhorn, but
read the final paragraph:

"Mr. Einhorn’s calls at the Ira Sohn conference Conference a year ago,
however, have not panned out, as Zero Hedge noted earlier on Wednesday. Going
short Moody’s and McGraw-Hill, while going long African Barrick Gold, would
have meant double-digit declines."

~~~
SlipperySlope
What would be the upside if Ballmer quit? 10% pop? I wish a corporate raider
would take on Microsoft with the intent of distributing the cash hoard to
stockholders and divesting all the money-losing operations - could be a
double!

~~~
potatolicious
> _"What would be the upside if Ballmer quit?"_

A CEO that knows WTF he's doing in the consumer space? Ballmer has proven that
he handles the enterprise products just fine, but if MS wants any hope of
hanging onto consumer products (consumer Windows, electronics, mobile, gaming,
etc) I'd get rid of Ballmer and write J Allard a blank check to come back.

~~~
nikcub
they have lost so much good talent during the Ballmer battle years - Allard,
Ozzie et al. They could have made a great team with a good CEO, instead we got
Ballmer getting rid of them all to strengthen his own position

~~~
wisty
If that's really the case (and not just that Ozzie was, say, impractical) then
that's the best reason I've heard yet to get rid of him.

A guy who will fire talent to make himself secure is a huge liability.

~~~
prodigal_erik
Spolsky had an "architecture astronaut" critique in part about how Ozzie keeps
blowing years rewriting Notes:
<http://joelonsoftware.com/items/2008/05/01.html>

~~~
mnutt
Rereading that article, I had forgotten about this part:

"because synchronizing files is just not a killer application. I'm sorry. It
seems like it should be. But it's not."

~~~
sriramk
I read that same bit again. Kudos to Dropbox - I would have agreed with that
statement if Dropbox hadn't existed

~~~
bad_user
That's because Microsoft is not familiar with the single most important
principle when designing consumer products ... simplicity and exclusion.

Dropbox is useful because it's in essence a simple product. Every time
Microsoft designs something, it has to include everything but the kitchen
sink.

------
ct
The leadership at MS needs serious re-work if they want to maintain their
position in the enterprise. Their cash cow is Windows OS and based on what
we've seen with their push for HTML5 at conferences like MIX over proprietary
hooks into their OS like WPF and Silverlight will just eventually decimate
their hold on the money making enterprise world.

Apple's enterprise hold last quarter grew 66%. This should scare Microsoft.

Our company has now pretty much set their sights on developing in HTML5 for
internal line of business apps which used to be heavily desktop Windows based
applications. This will eventually lead to less reliance on Windows and
Microsoft, which is a good thing for the company but a terrible blow for
Microsoft.

Apple seems to get it as to how to grow their business and keep the competitor
from cannibalizing it. Apple has been downplaying HTML5 support in
Safari/Webkit and almost purposefuly leaving things broken. This is a smart
move on Apple's part in my opinion.

I've been mostly a loyal MS supporter but with the way things are going I'm
strongly considering moving over from Windows to coding Apple apps and
learning Objective C despite how nice C# coding is.

There's still time and hope to see if they change things around and announce
something good at PDC in September, otherwise say goodbye to stagnant
Microsoft.

------
dschobel
The title is slightly misleading, I thought this guy or his hedge fund owned a
major piece of MSFT but the article makes no such mention.

~~~
nl
Hu?

Mr. Einhorn, _a long-time Microsoft shareholder_ , said at the Ira Sohn
Conference that the company had floundered under Mr. Ballmer’s stewardship,
missing major opportunities in establishing tablet products to compete with
Apple and wasting money on ill-conceived mergers and acquisitions.

Second paragraph. Emphasis added

~~~
tincholio
It says he's a long time shareholder, but the title here on HN says "lead
investor", which indeed makes it sound like he owns a big chunk of the whole
thing.

~~~
nl
He's the lead investor for the hedge fund

~~~
swombat
I'm not sure why you're being downvoted, since you're correct. I guess it's
because you didn't provide any supporting information. Here it is:

[http://www.businessweek.com/news/2011-05-26/greenlight-s-
ein...](http://www.businessweek.com/news/2011-05-26/greenlight-s-einhorn-says-
microsoft-should-replace-steve-ballmer.html)

> _Greenlight Capital Inc. President David Einhorn called for Microsoft
> Corp.’s board to replace Chief Executive Officer Steve Ballmer, saying the
> software maker suffers from “Charlie Brown management."_

Einhorn is the president of Greenlight capital, a hedge fund.

> _Greenlight, a New York-based hedge fund, added 1.39 million Microsoft
> shares last quarter, for a total of 9.07 million, according to a filing. The
> stake is worth $230.2 million. Microsoft’s shares have underperformed the S
> &P 500 in four of the past five quarters._

Also from this article:

> _Ballmer is the company’s second-biggest shareholder -- with more than 333
> million shares, or almost 4 percent. Co-founder and Chairman Bill Gates owns
> more than 561 million shares, or a 6.7 percent stake, according to Bloomberg
> data._

So Bill Gates + Steve Ballmer don't own 33%, as has been stated elsewhere, but
"only" 6.7 percent of this $200bn company.

~~~
Flenser

      333 million shares =  4.0% for Ballmer
      561 million shares =  6.7% for Gates
      So the combined total is:
      894 million shares = 10.7% for Gates + Ballmer

------
ravivyas
Although he has not brought a lot of growth to MS I do believe MS is at a
point where a lot of growth can be achieved. MS's issue has been it has a lot
of inertia with it and moves too slowly , but moves in the right direction.
The Xbox , Kinect for Xbox 360 , IE 9 , Win 7 , WP7 & Azure have all been
steps in the right direction.

------
kosei
Ballmer has done nothing for shareholders, and that's ultimately his job,
regardless of how much money they make. It's unconscionable that they've been
able to pull in the kinds of profits they have, and still done nothing with
their stock over the past 5 years.

------
xedarius
There's one man to lead this company, there always has been. Bill needs to
stop curing the world and get back to pushing the boundaries of technology.

~~~
yardie
Unless a billion buys immortality, Bill G is still mortal so whether he's six
feet under or off curing the world doesn't change the fact that Microsoft, for
the moment, is completely rudderless. If there is only one man to lead a
company that means it is dead meat because tomorrow is not a guarantee and the
investors know this. This is why Apple is working to codify what makes Apple,
Apple.

~~~
xedarius
Agreed, entropy is inevitable, and a transition is required. However leaving
Steve 'crazy' Ballmer in charge while you 'walk the earth' is a less than
stella plan.

