Speaking at an investment conference in New York this week, noted hedge fund manager and Microsoft investor David Einhorn said it was time for the software giant to fire Steve Ballmer. His argument is as familiar as are the increasingly common calls for Ballmer's ouster: Microsoft, the once-dominant tech giant, has surrendered its industry leadership and experienced a decade of stock stagnation.
"Ballmer's continued presence is the biggest overhang on Microsoft's stock," Einhorn said while appearing at the Ira Sohn conference Wednesday. "[He should] step aside and give someone else a chance."
Complaints about Ballmer are commonplace, of course, but Einhorn's comments are the most high-profile damnation yet. His company, Greenlight Capital, currently holds about 9 million Microsoft shares, representing 0.11 percent of the company's outstanding shares.
Steve Ballmer has been CEO of Microsoft since 2000, when cofounder Bill Gates finally stepped aside and ceded day-to-day control of the company to his one-time Harvard buddy. In the intervening "lost" decade, Microsoft stock has stagnated and the majority of the software giant's revenues still come from legacy product lines that were in place before Ballmer took over. Meanwhile, other companies—notably Apple and Google—have surged ahead to fill the leadership gap and seize new markets with abandon.
Earlier this year, The Financial Times reported that Ballmer had finally come under pressure from Microsoft's board to turn things around. Ballmer's 2010 bonus was curtailed because of Microsoft defeats in the tablet and smartphone market. And much of Microsoft's top talent has fled to faster-moving competitors in recent years—a brain drain that has sapped the hierarchically heavy company of decision makers.
It's possible that 2011 will be a make-or-break year for Mr. Ballmer. But it's unclear what more he can do. Massive research and development budgets, big acquisitions, small acquisitions, partnerships, new markets: None of these things ever seem to pay off for Microsoft. I suspect that would be true whether Ballmer was at the helm or not. And that possibility, perhaps, is the scariest thing of all.