(AFP/Getty Images via @daylife)
Steve Ballmer has been CEO of
The tech giant said Friday that Ballmer has decided to retire within the next year, and the board has begun a process to find his successor.
Ballmer, who has drawn criticism from investors for allowing rivals like
"There is never a perfect time for this type of transition, but now is the right time," Ballmer said in the company's release.
Since Ballmer took the reins Microsoft shareholders have had a negative total return of more than 17%, with the stock down over 35%, according to data from FactSet. While some of that decline can be attributed to the tech sector's rapid descent from the heights of the dot-com bubble, Microsoft has frustrated investors for years with its inability to translate a massive cash generation machine -- revenue and profits have grown enormously -- into stock market performance.
Citi analyst Walter Pritchard thinks the ultimate CEO transition may mean that some of the company's weaker businesses may be forced to pull their own weight, or risk being cut loose.
Ballmer's departure "puts everything on the table," Pritchard writes in a note Friday morning. "[A] new CEO will likely have broad freedom to make changes to the business, including exiting businesses and returning more capital," he adds, with an eye toward focusing on corporate customers and moving away from the consumer market, with the potential for greater capital return to shareholders beyond the billions the company has already shelled out in dividends and buyback.
Gates, who will sit on the board search committee tasked with finding Ballmer's replacement, said Microsoft is "fortunate to have Steve in his role until the new CEO assumes these duties."
Shares of Microsoft shot higher in pre-market trading and were up nearly 8% just after the open at $34.86. The surge still leaves Microsoft below the $35.44 close July 18, the day it reported ugly quarterly results that prompted a more than 11% drop in the following session.