Yesterday Greenlight Capital President David Einhorn -- who controls $5 billion of investor money -- tore Steve Ballmer a new aperture. "It's time for Microsoft's board to tell Steve Ballmer, 'All right, we see what you can do, [now] let's give so-and-so a chance.'" One has to wonder which so-and-so Einhorn had in mind.
As of March 31, Greenlight held 9 million shares of Microsoft stock worth about $220 million, or about 0.1 percent of the total. Bill Gates owns 561 million shares and Ballmer owns 333 million shares -- almost 11 percent of the company, or 100 times as many shares as Greenlight -- so a shareholder fight doesn't seem imminent. I think Einhorn has a subtler plan in mind.
Einhorn's pronouncements and explanation won't come as a surprise to anyone who's been watching Microsoft's stock or its latest corporate machinations.
Microsoft cognoscenti have been calling for Ballmer's resignation for years, with numerous examples cited: the old Vista fiasco, the 2008 Yahoo takeover that didn't go through (billed at the time as a "failure" but now widely accepted as a blessing), laggard Office 2007 sales.
Microsoft's problems piling up
Recently, the problems have just piled up. In the mobile arena, the Kin crashed and burned and took a whole lot of greenbacks along with it. Mango talk and Nokia subversion notwithstanding, Windows Phone 7 embarrassments continue to mount. Just last week, the headlines touted Gartner's estimate that Microsoft had sold 1.6 million Windows Phone 7 devices in the first quarter of this year. Many news outlets soft-played the fact that Gartner also tallied 3.6 million Windows phones sold in the first quarter, leading to the inescapable conclusion that the ancient Windows Mobile 6.x still outsells Windows Phone 7 by a wide margin.
Online, Microsoft continues to pour astonishing amounts of money into Bing, buying small improvements in search market share in the United States. Earlier this month I wrote about the way Microsoft will spend about $5.5 billion on Bing this year to generate $3 billion in online revenue. Perhaps Ballmer should ditch his Excel developers and grab a calculator.
Then there's the jump to the cloud. We all know Microsoft has to make the leap, but there have been so many public outages -- Hotmail, BPOS, Azure -- and the outages have been handled so poorly, with customer notifications a distant afterthought, that many of us wonder whether SteveB's crew can handle it.
Add to that the decline in Windows 7 sales, down 4.4 percent year over year in Microsoft's last earnings report. And the $8.5 billion Microsoft paid for Skype -- which just went down again for many users.
It's not a pretty picture. No wonder Microsoft's stock sleeps with the fishes.