Microsoft shareholders suffered through a lost decade of near stagnation under the leadership of CEO Steve Ballmer. Now that Ballmer is set to retire, Microsoft has an opportunity to choose a CEO who can do a much better job of converting the tech titan's potential into shareholder value. The company has at least five names on its list, but
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- The 5 Worst CEOs of 2012 and Why They Should Be Fired
- 8 Reasons Why Mimi Would Sell Microsoft (Nasdaq:MSFT) and Dump Steve Ballmer
What would it take for Money Morning Chief Investment Strategist Keith Fitz-Gerald to buy Microsoft (Nasdaq: MSFT) stock?
The company's shares jumped 7% on Friday on news that often-embattled and rarely popular CEO Steve Ballmer will retire in the next 12 months. News that Ballmer will finallytake a bow was music to Wall Street's ears, apparently, but Fitz-Gerald was singing a different tune.
Money Morning's experts picked through the list of disappointing names and came up with the five worst CEOs of 2012.
Here are the finalists, along with our experts' reasons why these weak performers should be given the axe in 2013:
- Ben Bernanke, Chairman of the U.S. Federal Reserve - Picked by Chief Investment Strategist Keith Fitz-Gerald:
Bernanke is the CEO of the biggest private institution on the planet, the Fed.
Despite overwhelming evidence that the theories and methods he is using have not worked, are not working and have never worked since the dawn of recorded history, he continues to plow ahead with more of the same failed monetary and fiscal policy that got us into this mess.
In the process, he risks unspeakable damage to the United States and to the global financial system while only kicking the proverbial can down the road.
He wanted to know what I knew about a little computer company called Microsoft. It was the brainchild of the son of one of his partners at Bogle & Gates, William H. Gates, Sr.
"Not much," I replied.
But I did tell my dad that I loved using MS-DOS in the computer lab with my friends. I was a card-carrying member of the nerd herd back in the day, so I spent a lot of time there and knew Microsoft's fledgling PC-based software pretty well.
My grandmother Mimi, though, had a different point of view. You've heard me mention her before.
She's the one who was widowed at an early age and became a savvy global investor long before people ever thought to look at the bigger picture.
Mimi didn't care that the buzz was about the MS-DOS language or even about computers. Having grown up in the Depression, she believed that what people would do with the technology was far more valuable.
She said she had confidence that Sr.'s son, Bill Gates Jr., understood this -- which is why she invested heavily in the Microsoft IPO in 1986. Enough said.
Today, though, I think she'd voice an equally strong opinion about Microsoft (Nasdaq: MSFT) CEO Steve Ballmer. In fact, I think she'd fire him. Here's why....
8 Reasons Why Steve Ballmer Must Go
- Ballmer took over Microsoft 12 years ago when the stock was about $60. Now it struggles to maintain $30. Microsoft has $58.16 billion in cash and this is the best Steve Ballmer can do?
- Office and Windows are dying. Once the business world's de facto standard, both are being replaced by cheap, easy-to-operate software, much of which is actually free as well as compatible. This is a big problem considering that, according to the Wall Street Journal, roughly 85% of Microsoft's revenue is coming from just two products: Windows and Office.
- The company isn't innovating fast enough or aggressively enough. What's more, it's attempting to compensate for its own shortcomings with increasingly ill-conceived acquisitions. For instance, Microsoft forked over $605 million for 18% of the Barnes and Noble Nook e-reader and still has no real ability to compete with Amazon's Kindle. It also couldn't seal the deal with Yahoo. Despite a sizable head start using Yahoo's core search technology, Bing has a mere 15% of the search market today. Ballmer waited nearly four years to respond to the iPad and his "Surface" tablet was ho-hum when it could have been jaw dropping. One more: Microsoft paid $8.5 billion in cash for Skype. Apparently the fact that Skype was not profitable didn't matter. Ballmer's track record suggests to me that he buys businesses that nobody else "must have."
- Microsoft's Internet offerings remain wannabes and are highly priced at that. Take Yammer. Microsoft just paid $1.2 billion through the nose to acquire a company that was valued at $600 million last fall when it raised $85 million in a venture offering. Team Ballmer plans to integrate it into Office on the assumption that somehow the Microsoft marriage will endear the brand to customers anxious to socialize business. I think they're delusional. Most Microsoft users I know, including myself, are actively planning to move away from the legacy software we've used for years the first instant we can in favor of software we actually like to use!