The preemptive strike before the shareholders went ape
Ballmer was not only complacent about Apple's iPad and iPhone, but his promises to catch up proved arrogant and empty. Grilled by analysts in July 2010 on Microsoft’s answer to the fast-selling iOS mobile and fondleslab from Apple, Ballmer was bombastic: he called Microsoft’s response “job-number-one urgency” adding “nobody’s sleeping at this point”.
There were no technical details, but Ballmer promised Microsoft’s answers “as soon as they are ready”. That answer came with Window Phone 8, a platform with single-digit market share.
But the catalyst for Friday’s news would have been the fourth-quarter results. That $1bn Surface RT write-off caused Microsoft to miss analysts' estimates for the year.
Wall St was furious: it dumped MSFT stock and slashed $34bn off the company's value. Shareholders lobbed a class-action lawsuit at Ballmer personally, as well as other top executives plus the Microsoft corporation, for allegedly hiding the scale of losses.
The moneymen already held the chief exec accountable for a decade’s worth of poor stock performance, but missing estimates thanks to the Surface RT folly was too much. Tellingly, Microsoft’s share price went up on news of Ballmer’s exit – something the software giant failed to achieve even on the launch of Windows 8 and Surface RT in October 2012.
Shareholders had already started to turn on Ballmer. ValueAct, was pushing for a seat on the Microsoft board to get its way. Company investor David Eindhorn of Greenlight Capital, meanwhile, had said it was time for Ballmer to go.
The revolt, though, was more chatter given ValueAct and Eindhorn held less than one per cent each in the Redmond goliath. To effect change, you needed a 10 to 22 per cent stake.
Back in May, The Register called Ballmer the Teflon CEO. There may have been mutterings but there was no major reason to suspect a change, given investors had swallowed their leader’s blunders on internet search, smartphones and tablets, and had shown no real backbone by not standing up to their chief - a man who, admittedly, helped Gates build one of the world's most successful companies.
At Microsoft's Worldwide Partner Conference in July, a nervous Ballmer said he and his company had done "a heck of a good job" on Windows 8, calling it "remarkable":
So, why has Ballmer gone now, given his ability to dodge bullets, spaff billions of dollars, and offer empty promises in the aftermath?
The lacklustre take-up of Windows 8 and the Surface RT write-down.
It seems the board decide to act before mutterings among small stockholders escalated into a full-scale, damaging and diverting Dell-Icahn-style war involving either the top shareholders or small shareholders combining forces to snatch the company out from under the board.
For Gates & Co, the reorganisation would also have seemed the right juncture to remove Ballmer in order to avert a second lost decade and protect their company from a supremo seemingly unable to change his ways. ®