Steve Ballmer at the Microsoft CEO Summit 2013. (Microsoft Photo).
Steve Ballmer at the Microsoft CEO Summit 2013. (Microsoft Photo).

Activist investment firm ValueAct Capital has held talks with members of Microsoft’s board about its desire to pursue a board seat, pressing the company over issues including the apparent lack of a succession plan for Microsoft CEO Steve Ballmer, according to a report by Reuters this afternoon, citing two anonymous sources.

Reuters reports that the investment firm has been contacted in recent months by institutional investors “expressing concern over management execution and strategy” at Microsoft.

Microsoft isn’t commenting on the report. The news follows a big earnings miss by the company yesterday, along with the announcement that Microsoft was taking a $900 million charge over “inventory adjustments” for its Surface RT tablet, following widespread price-cutting after the company’s iPad rival didn’t live up to its early expectations.

Microsoft shares closed down 11 percent today at $31.40.

The investment firm earlier this year said it had taken a $2 billion stake in the company, and it has previously been reported to be interested in a seat on the Microsoft board. Rick Sherlund, a longtime analyst now with Nomura Research, reiterated this week that he expects ValueAct to make its move as early as next month.

The recently announced reorg at Microsoft didn’t create a clear successor to Ballmer, who has indicated in the past that he wouldn’t retire until 2017 or 2018.

 

Comments

  • Guest

    Whatever pressure they were applying previously, you can bet it just increased tenfold following this huge miss.

  • Guest

    There’s a perfectly good succession plan based off of one of the greatest figures in history: Alexander the Great.

    When on his deathbed, with no clear successor, Alexander was asked to whom the Empire should go. Legend says that he answered “To the strongest”.

    Setting in motion decades of war between his generals that left his empire in pieces.

    Bad for the company but will be a lot of fun to watch!

    http://en.wikipedia.org/wiki/Alexander_the_great#Death_and_succession

    • Guest

      Grow up.

  • Guest

    If Ballmer remains CEO until 2018, the least of MS’s problems will be a succession plan.

    • Guest

      Make that FY 2015.

      • Guest

        Read the article.

        • Guest

          Really?! This was so hard to understand? OK, here again in slow: Even though Ballmer expressed that he intends to stay until 2017 or 2018, I believe MS will be in deep trouble if they keep him as CEO for another year.

    • Ryan Parrish

      People have been saying this shit since 2000, and since then in every financially measurable way the company is doing better(revenue, profit, earnings, dividends, etc). Stock price is a distraction, and during Gate’s tenure the only reason it was better is because Microsoft was riding the tide of the rest of the tech tide in the 1990’s. Steve Ballmer has been a much better CEO to the financial community than Bill Gates ever was, PERIOD.

      • Guest

        Forbes: “Without a doubt, Mr. Ballmer is the worst CEO of a large publicly traded American company today.” 05/12/2012

        You were saying?

        • Ryan Parrish

          They’re basing that on feelings and their personal thoughts on what they think Microsoft ought to be doing and not on performance. The fiscal results speak for themselves, which is the primary job of a corporation: to make money. And in that regard, Microsoft is doing better than most companies on earth.

          • Guest

            They based it on performance in that he started out on top and maneuvered the company into near irrelevance. Read the article to get all the details. Sure they are still making tons of money, but there was virtually no growth for 13 years, while Apple and Google exploded during the same time. And now they are threatening MS’s bread and butter products. It all depends where you start and what you make out of it. Heck, most companies would even kill for $1b annual revenue, but for MS or Google or Apple that same amount would be disastrous. Ballmer has zero vision and it shows, maybe not quite yet in the bottomline but certainly in the relevance of their new products and “innovations”. What’s the future of MS? No one really cares. And that’s scary.

            BTW, lately Apple isn’t doing so hot in the innovation department either, and it reflects in their share value accordingly.

          • Ryan Parrish

            They’re looking at share price growth, which is but one metric, and something the company itself usually has little control over.
            In terms of revenue and profits the company has been very consistent: Average net income growth of 11% per year over those 14 years.
            Average gross profit growth of 9% per year, only decreased once in those 14 years in 2009 when most companies were contracting with the global economic problems.
            Average revenue growth of 10% per year, only decreased once in those 14 years in 2009 when most companies were contracting with the global economic problems. ()

            So, consistent double digit growth doesn’t get rewarded makes it look more like people just don’t like Microsoft rather than how the company has been doing for the last 14 years.
            http://www.microsoft.com/global/investor/RenderingAssets/Downloads/FY13/Q4/FinancialStatementFY13Q4.xlsx

          • Guest

            Compare all that to Apple or Google during the same 13 years and you know why.

          • guest

            Actually the primary job of a public corporation is to increase shareholder value, which Ballmer has failed miserably at.

      • Guest

        I can lose billions for way less money!

        • Ryan Parrish

          Lose billions of what? Did you even read the income statement? Profits of $5 billion, not loss of $5 billion, and for the fiscal year profits of almost ~$27 billion. I’m pretty sure most companies would kill to have those numbers.

      • guest

        Primarily because the PC stayed the center piece of computing for most of that time and MS dominated the PC. But that’s changed now and MS isn’t a significant player in either smartphones or tablets. A stock that goes nowhere for more than a decade isn’t a distraction. It’s a major red flag that a lot of very smart people aren’t confident the company and its management are on the right track. Several other tech companies who also rode the 90’s tech tide have outperformed MS over the period 2000-2013. So that excuse fails too.

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