Bill Gates, the co-founder and current Chairman of the Board, and Steve Ballmer’s mentor, is the next target of the three big Microsoft investors target after a successful lobby that pushed Ballmer to step down as CEO.
Reuters reported the news without naming the investors, but said the investors collectively hold 5 percent of Microsoft’s stocks and among the top 20 major investors of the company. They argue that Gates is holding a position that is “disproportionate” to his 4.5 percent stake in the company.
If Bill Gates resigns as Chairman, analysts predict the stocks will rally. The company has long been in need of a new direction and towards creating a post-PC culture that would attract fresh leadership, innovation and agility, to get Microsoft back as an industry leader it once was.
Investors are already happy that the company is moving forward following Ballmer’s decision to retire after a decade of lackluster performance that saw Microsoft’s share price at a plateau below $40 and lost opportunities in mobile computing to Apple and Samsung. The company is also having trouble marketing its Surface tablet in head-to-head competition with well entrenched brands.
On the other hand, investors worry that Bill Gates remaining as Chairman might influence Ballmer to stay at the board, so he (Ballmer) could have a hand in the selection of his replacement. The majority feels this is not the best outcome for the company. There are also concerns that eliminating both Gates and Ballmer would create a leadership vacuum and uncertainty.
In fairness to the Gates and Ballmer tandem, Microsoft has attained record-breaking revenue of $73 Billion in this last fiscal year. Since Gates turned over the CEO role to Ballmer in 2000, they have introduced 16 new businesses that delivered billions of dollars in income. However, compared with its competitors, company stock prices have languished.
Rumors have floated around about Alan Roger Mullaly, CEO of Ford Motor Company, as being groomed to replace Ballmer. Mullaly is the kind of enterprise turn around specialist whom Microsoft has been looking for. He could inject new vigor and direction in Microsoft as he has done extremely well at Ford.
Many investors are highly optimistic that under a new leadership, Microsoft will be able to leverage its purchase of Nokia and transform the brand into a major competitor in the mobile wireless sector. This upbeat mood is fueled by the company’s target to triple its market share from five to 15 percent in the next five years.
Another primary concern by shareholders at Microsoft is the capital allocation which had been poorly performed for many years and affected its share prices. Ballmer spent billions in acquisitions of companies that later ended in write-down, such as $6.2 billion AQuantive.
Changes in Microsoft might introduce a lot of uncertainty. However, reflecting on the mistakes the company made in the last ten years, market analysts say it has a better chance of turning around its fortune under a new-generation of leadership.
Written by: Janet Grace Ortigas