Judging from the 7.28% "Ballmer Bounce" that followed his announcement, the markets love the idea of long-suffering Microsoft CEO Steve Ballmer stepping down.
So do a lot of investors who believe now – finally – it's time to buy Microsoft.
But is it?
Can the company bring in a new CEO with vision? Can it finally begin to understand content? And is it willing to jettison employees and products that aren't "worth" what the legacy suggests?
I could write you some long, eloquent essay on the merits of corporate turnarounds.
Instead, I'm going to show you one simple chart…
To me, it's clear: All good brands have their day.
As recently as March 2009, the Redmond-based behemoth enjoyed a 90% market share in connected devices running Microsoft systems.
Today that's shrunk to less than 25%, which leads me to believe that Microsoft has had its day.
Some could argue that's because the number of devices has increased dramatically over the same time frame. But remember, there are going to be 7 billion interconnected devices on the planet by the end of this year and roughly 50 billion by 2020 – seven for every person alive on the planet today.
Apple recognized this early and changed the game with its tablets and its iPhones. Ballmer misjudged their impact and was dismissive. So did Palm, RIM, Dell, Gateway, Wang… and we know where they are today, after watching their share of interactive utilization and connected devices plummet.
Apple stock shot up more than 5,300% since January 2001. And Microsoft…
Well, let's just say that to call it "stagnant" is an insult to truly stagnant stocks. It's returned 24.26% over the same time period – and that only comes after a 23% rally since the top of 2013 alone.
As for the previously mentioned Ballmer Bounce…
The market quickly gave most of it back, dropping 5% over the following three trading sessions. It looks like the Street doesn't believe a new CEO will have any more luck righting the listless Microsoft ship.
My good friend Barry Ritholtz, CEO of Fusion Capital, put it this way during a recent conversation: "Microsoft stopped setting the agenda 18 years ago."
I agree. Windows was its defining moment, and the company has been playing a game of "me too" ever since.
The real question: Can the stock recover now that Ballmer is going out the door? I wouldn't bet on it.
About the Author
Keith is a seasoned market analyst and professional trader with more than 37 years of global experience. He is one of very few experts to correctly see both the dot.bomb crisis and the ongoing financial crisis coming ahead of time - and one of even fewer to help millions of investors around the world successfully navigate them both. Forbes hailed him as a "Market Visionary." He is a regular on FOX Business News and Yahoo! Finance, and his observations have been featured in Bloomberg, The Wall Street Journal, WIRED, and MarketWatch. Keith previously led The Money Map Report, Money Map's flagship newsletter, as Chief Investment Strategist, from 20007 to 2020. Keith holds a BS in management and finance from Skidmore College and an MS in international finance (with a focus on Japanese business science) from Chaminade University. He regularly travels the world in search of investment opportunities others don't yet see or understand.