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Microsoft starts search for a new leader

CHANGING TIMES:Microsoft CEO Steve Ballmer said on Friday that he would retire within a year, urging the company to find a new head to see through reorganization

The Guardian

Microsoft Corp CEO Steve Ballmer gestures while on stage at the Nokia capital markets day in London on Feb. 11, 2011.

Photo: AFP

Microsoft has stepped into a new and uncertain era with the announcement that its CEO Steve Ballmer will retire within 12 months, triggering a search for a successor to take over the world’s biggest software company.

Friday’s announcement surprised analysts and investors, but sent the group’s shares initially surging more than 8 percent, reflecting belief that the company will benefit from new leadership as it tries to innovate and chase the market for smartphones and tablets.

“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said.

The company needed a leader who could see through its reorganization and new strategy, he added.

“My 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,” he said.

Ballmer, 57, who succeeded Microsoft founder Bill Gates as CEO in 2000, will stay on until a successor is found. Gates, now chairman of the company, is to be part of a small committee tasked with finding the next boss. It is to be chaired by John Thompson, the board’s lead independent director, and will consider internal and external candidates.

Microsoft devices head Julie Larson-Green was tipped as a candidate, but many analysts urged Microsoft to plump for an outsider.

Ballmer first met Gates in 1973 when they shared a dormitory hall at Harvard University. He joined the company in 1980 as the company’s 30th employee, after it landed a contract to supply an operating system to IBM, and swiftly rose up the ranks to Gates’ No. 2.

Under Ballmer the company developed successful products such as Windows XP and the Xbox 360. It grew to be worth US$78 billion and employ more than 100,000 people. Its software has more than 1 billion users and remains immensely profitable — it made a US$6 billion net profit on nearly US$20 billion of revenues in its past financial year.

However, over the past decade its share price has stagnated.

Critics have accused Ballmer of failing to anticipate the explosive growth in tablets and smartphones, and the decline of personal computers. Some, though not all, were appeased by a 22 percent jump in share price this year after the company started selling its own tablet-style computer.

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