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05-17-12ceosummit_ballmer_PageAs the dust settles from Microsoft’s big earnings miss last week, the attention is turning to an expected attempt by activist investor ValueAct Capital to press for representation on the Microsoft board. And one longtime analyst says the firm’s prospects are good.

Rick Sherlund of Nomura Research writes in a note to clients, “We think the chances of [ValueAct] winning a board seat are high given the dissatisfaction with how Microsoft has failed to optimize shareholder value, and we suspect Microsoft figures it is better to work through the ValueAct agenda in private rather than in a public proxy solicitation process.”

Reuters reported on Friday afternoon that ValueAct 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.

But the big short-term issue appears to be the company’s cash position, which now amounts to more than $77 billion in cash and short-term investments. ValueAct and other investors are pressing for Microsoft to return more of that to shareholders in some form.

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