27 January, 2014 11:27

Microsoft’s Muddle

Why is it so hard to fill this job?

In August Steve Ballmer announced that he would resign as Microsoft’s Chief Executive. Since then the stock has rallied 20%, mainly on hopes that a new CEO could turn things around. During his time as CEO, sales tripled and earnings rose 16% per year. But the company missed all the major innovations: search, social, and mobile, while issuing disastrous Windows updates. So the stock has languished. Only after his resignation was released did the shares show any sign of life.

So why is it taking so long to find a successor? Five months is a long time for big company to be in leadership limbo. It can’t be the pay: he made $1.3 million last year. And the potential for a turnaround is significant. Surely someone could put Microsoft’s $28 billion in operating cash flow to work profitably. But a specter haunts Microsoft: its founder and Board Chairman Bill Gates.

Gates is leading the search for a new CEO. He leads a weak Board filled with people who used to have tech credentials. He facilitated Microsoft’s miss of new tech trends. He’s still the name most folks associate with Microsoft. And he’s the reason the company has founder’s fever—the malady that can afflict once-great organizations when times have moved on but the original leader won’t. He still has his partisans and loyalists, and they’re poisonous.

Apple has this advantage over Microsoft. Steve Jobs is gone. If Microsoft wants a strong leader to take it in a new direction, Gates has to get out of the way.

Douglas R. Tengdin, CFA

Chief Investment Officer

By | 2017-07-17T12:34:23+00:00 January 27th, 2014|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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