Steve Ballmer, the former Microsoft CEO and new owner of the L.A. Clippers, will step down from Microsoft’s board effective immediately, according to a letter to his successor, Satya Nadella, posted on the company’s website moments ago.
Ballmer cites factors including his new obligations as an NBA owner, which kicked off with a rally yesterday for Clippers fans at Staples Center in downtown Los Angeles.
Ballmer is Microsoft’s largest individual shareholder, having taken over that status from Bill Gates earlier this year, and he says in the letter that he expects to “continue holding that position for the foreseeable future.”
“I bleed Microsoft — have for 34 years and I always will,” Ballmer writes to Nadella. “I continue to love discussing the company’s future. I love trying new products and sending feedback. I love reading about what is going on at the company. Count on me to keep ideas and inputs flowing.”
It’s the latest in a series of major changes on the Microsoft board. Bill Gates remains a board member but handed over the chairman’s title to John Thompson earlier this year. Other recent additions include wireless veteran John Stanton and activist investor Mason Morfit of ValueAct Capital. With Ballmer’s exit, Microsoft now has 10 board members.
One of the concerns when Nadella was named CEO was that he wouldn’t be free to make necessary changes with Ballmer and Gates both on the board, but as this news demonstrates, that doesn’t seem to be the case.
Continue reading for the full text of Ballmer’s letter, and Nadella’s response.
Dear Satya,
As I approach the six month mark of my retirement and your appointment as CEO, I have been reflecting on my life, my ongoing ownership of Microsoft stock, and my involvement with the company. I have reached some conclusions and wanted to share them with you. I know August is the key month during which the company starts to prepare the proxy statement for the next shareholders’ meeting, and so these thoughts are probably timely for that too.
First, Microsoft has been my life’s work and I am proud of that and excited by what I see in front of the company and this leadership team. There are challenges ahead but the opportunities are even larger. No company in the world has the mix of software skills, cloud skills, and hardware skills we have assembled. We draw talent as well as any company in the world. We have the profitability to invest in long-term opportunities and still deliver superior shorter term performance. You’re off to a bold and exciting start.
Microsoft will need to be bold and make big bets to succeed in this new environment. Writing great software is a tremendous accomplishment and selling software has been a fabulous business. In the mobile-first, cloud-first world, software development is a key skill, but success requires moving to monetization through enterprise subscriptions, hardware gross margins, and advertising revenues. Making that change while also managing the existing software business well requires a boldness and fearlessness that I believe the management team has. Our board must also support and encourage that fearlessness for shareholders to get the best performance from Microsoft. You must drive that.
I had not spent any time really contemplating my post-Microsoft life until my last day with the company. In the six months since leaving, I have become very busy. I see a combination of the Clippers, civic contribution, teaching and study taking a lot of time. I have confidence in our approach of mobile-first, cloud-first, and in our primary innovation emphasis on platforms and productivity and the building of capability in devices and services as core business drivers. I hold more Microsoft shares than anyone other than index funds and love the mix of profits, investments and dividends returned in our stock. I expect to continue holding that position for the foreseeable future.
Given my confidence and the multitude of new commitments I am taking on now, I think it would be impractical for me to continue to serve on the board, and it is best for me to move off. The fall will be hectic between teaching a new class and the start of the NBA season so my departure from the board is effective immediately.
I bleed Microsoft —have for 34 years and I always will. I continue to love discussing the company’s future. I love trying new products and sending feedback. I love reading about what is going on at the company. Count on me to keep ideas and inputs flowing. The company will move to higher heights. I will be proud, and I will benefit through my share ownership. I promise to support and encourage boldness by management in my role as a shareholder in any way I can.
All the best,
Steve
Satya Nadella response to Steve Ballmer
Steve,
First, thank you for all of your support during my transition this year and for the past 34 years. It’s been a great privilege to have worked with you and learned from you. Under your leadership, we created an incredible foundation that we continue to build on — and Microsoft will thrive in the mobile-first, cloud-first world.
While your insights and leadership will be greatly missed as part of the board, I understand and support your decision.
As you embark on your new journey, I am sure that you will bring the same boldness, passion and impact to your new endeavors that you brought to Microsoft, and we wish you incredible success. I also look forward to partnering with you as a shareholder.
On behalf of all of Microsoft and the Board of Directors, thank you.
Satya
