Several years ago I attended a magazine editorial meeting and pitched what I thought was a slam dunk story idea.
“Picture this,” I said. “The cover of the magazine with a photo of Steve Ballmer looking all huffy and mad. The caption: ‘The. Worst. CEO. Ever.’”
Nervous laughter faded to silence. Finally an editor said, “Um, Adam, Microsoft is a big advertiser.”
I was reminded of this when I first heard the news that Ballmer had announced his retirement, to take place once a successor is found. When I pitched that bad CEO story, Microsoft had real power, although it was past its epic prime. Still, competitors – and magazines, I suppose – felt compelled to step gingerly.
Apple and Google were ascending and Microsoft — despite vast cash reserves, a hammerlock on the desktop, and a successful games division in Xbox — was trending downward. You could see that with software moving to the cloud, Microsoft was faced with its own creative destruction: If it segued to the cloud, it would cannibalize its still extremely profitable Windows business. If it didn’t, it might find itself rendered obsolete.
Ballmer noted this in this morning’s written statement. He said “there is never a perfect time for this type of transition, but now is the right time,” adding that his “original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction.”
Of course, he might have undertaken this strategy six or seven years ago, before its failed operating systems, Windows phone, disastrous mobile plays, and other projects that went grossly overtime, over budget, and ultimately awry. Just because a company is big doesn’t mean it can’t change. Look at IBM under Sam Palmisano. The company sold off its PC division to Lenovo and went all in on business services. Perhaps indicative of Wall Street’s view of Ballmer’s stormy tenure is that Microsoft’s stock shot up almost 7 percent shortly after the news broke.
The company had prospered throughout the 1990s as Windows became the world’s operating system, and in December 1999 its stock hit an all-time high of $119.94 a share. It has been dropping ever since. Apple, the company it almost drove out of business, has supplanted it as the most valuable tech company. Google has also left it in its dust. In fact, as Kurt Eichenwald pointed out in Vanity Fair, one relatively new Apple product: the iPhone, is worth more than all of Microsoft. The company that had been built on innovation had stopped innovating. Products took eons to get to market, and when they did they were either too late or often not very good.
Case in point: Not long ago I was planning a trip to the Microsoft campus, research for my forthcoming book (“Play at Work: How Games Inspire Breakthrough Thinking” — look for it in October). Before booking my air ticket for the West Coast, however, I felt compelled to phone my contact at Microsoft with a confession.
Microsoft had removed all landline phones and required employees to use the company’s Lync software, which runs phone calls through computers. Except every time I called my source at Microsoft, the call would drop or the quality was miserable, and I’d have to try again. And again. Microsoft personnel had taken to using their cell phones instead.
But I was more concerned with something else. “I use a Mac laptop and carry an iPad and iPhone,” I told him. “Could this be a problem?” After all, Bill Gates had banned his own kids from owning iPods, and Microsoft was notorious for its cutthroat behavior with competitors. Then there were all those critical stories I’d written about the company over the years. I was ruing the times I’d referred to Microsoft as “the dominatrix of the desktop.”
“Nah, not at all,” the guy replied. “It might have been a problem in the past, but the place has changed over the past 10 years. This isn’t the same Microsoft.”
He paused. “Um, you’re not going to be interviewing Steve Ballmer, are you?”
Legend has it that Ballmer once heaved a chair across a room amidst an obscenity-laced tantrum after an executive broke the news he was joining Google.
“No,” I said.
“Yeah, yeah, then you’ll be fine,” he said.
And so will Ballmer, whose imminent departure has actually increased his personal wealth. Yes, that’s right. He’s worth more leaving than staying. As John Paczkowski at AllThingsD pointed out, Ballmer made almost $1 billion by quitting. His 333,252,990 shares of the company are worth about $11 billion, and the 7 percent run up in its stock after his announcement increased his stake, grossing him $769 million.
Or if you want to look at his tenure another way, Microsoft was worth $600 billion the day before he assumed control. Yesterday its market cap was south of $270 billion.
Name me one other CEO whose company lost $330 billion during his reign.
You can’t, right?
Like I said. Steve Ballmer. The. Worst. CEO. Ever.
Image via Wikimedia