Einhorn Calls on Microsoft to Fire Ballmer

[Parsad]

Not sure I agree, nor disagree with Einhorn on this.  I think the company needs to do more, but not sure firing Ballmer is the answer.  Cheers!

 

http://blogs.barrons.com/techtraderdaily/2011/05/25/microsoft-fire-ballmer-says-einhorn/?mod=yahoobarrons

[Parsad]

What is the alternative to Ballmer? I don't think there is an alternative.

 

I'd be happiest if Bill Gates came back, but that isn't going to happen.  You also can't replace Ballmer with some VP at Microsoft, as they just won't carry as much weight...literally!  ;D  There really is no obvious replacement for Ballmer.  Cheers!

[prunes]

Better the devil you know, no?

[onyx1]

If Ballmer is now responsibile for the stock price of which he has at best indirect control, then Ballmer must be given credit for that which he does control: earnings.  On that part he has tripled earnings since 2001 (a period with two recessions).  

 

To not give full credit to Ballmer for earnings growth implies that any monkey can run this company.  Which further confirms that MSFT is a great company to own.

 

IMO, keep Ballmer as long as earnings continue to grow.  We are at a point in valuation that the stock price can no longer ignore earnings and earnings growth.

[collegeinvestor]

welp...I wasn't there but it seems like he hasn't unearthed anything shocking this year.

[Parsad]

To not give full credit to Ballmer for earnings growth implies that any monkey can run this company.  Which further confirms what a great investment MSFT is.

 

You might be correct on both counts!  ;D  Cheers!

[ubuy2wron]

Has anyone here looked at the performance of Einhorns Greenlight Inurance as a business as opposed to the stock.

[txlaw]

Ballmer may be a monkey man, but to say that he needs to be fired because the stock price is low is ludicrous.  Is that really what Einhorn said?

 

Now, if he's arguing that Ballmer has driven out forward thinking people like Ray Ozzie, okay, that may be fair (but not necessarily accurate) criticism.  But to fire him solely to create a catalyst? 

[Parsad]

Instead of buying Skype, Microsoft could have bought Fairfax for $8.5B!   ;D  

 

- Prem and Hamblin-Watsa could have allocated the capital  

- You have a great leader ready to step in for Ballmer

- And all that free-cash going into insurance and investments

 

While Prem won't sell, how many other companies would be better off just going to Fairfax, offer to buy them, and let them step in.  Wouldn't that make sense for so many companies far bigger than Fairfax?  The problem is that most people just don't want to admit that someone else could do a hell of a better job.  Just food for thought.  Cheers!

[Parsad]

Ballmer may be a monkey man, but to say that he needs to be fired because the stock price is low is ludicrous.  Is that really what Einhorn said?

 

Now, if he's arguing that Ballmer has driven out forward thinking people like Ray Ozzie, okay, that may be fair (but not necessarily accurate) criticism.  But to fire him solely to create a catalyst?

 

I think it's a little of both.  A similiar argument could be made against other CEO's...for example Jeff Amelt at GE.  Both have grown their respective businesses, but in certain areas that business was floundering and slow to adapt.

 

I think in Microsoft's case, they were so busy protecting the moat, that they missed some of the innovation that was going on around them.  They were so late when it came to search, mobile and cloud.  I think they've recognized that in the last couple of years, and have been working on the innovation side again.  But this industry moves very quickly...not like missing out on Gatorade or Frito-Lay in Coca-cola's case.  Cheers!

[DCG]

I've been calling for them to fire him for years. I think the ultimate replacement would be Eric Schmidt, but not sure he'd take the job.

[goldfinger]

What is the alternative to Ballmer? I don't think there is an alternative.

 

I'd be happiest if Bill Gates came back, but that isn't going to happen.  You also can't replace Ballmer with some VP at Microsoft, as they just won't carry as much weight...literally!   ;D  There really is no obvious replacement for Ballmer.  Cheers!

 

I am sure Ballmer and Bill talk very often about big decisions and next steps. It is like Ballmer is the eminence grise in there.

Einhorn is a hedge fund guy. He wants to fire up the stock price quickly.

[EdWatchesBoxing]

To not give full credit to Ballmer for earnings growth implies that any monkey can run this company.  Which further confirms that MSFT is a great company to own.

 

I agree. It's funny how I've come around 180 and view MSFT in a different light now. I used to be so anti-Microsoft when I was in school. It was the cool thing then. I see the value in a lot of their products now.

 

Instead of buying Skype, Microsoft could have bought Fairfax for $8.5B!  ;D 

 

- Prem and Hamblin-Watsa could have allocated the capital 

- You have a great leader ready to step in for Ballmer

- And all that free-cash going into insurance and investments

 

While Prem won't sell, how many other companies would be better off just going to Fairfax, offer to buy them, and let them step in.  Wouldn't that make sense for so many companies far bigger than Fairfax?  The problem is that most people just don't want to admit that someone else could do a hell of a better job.  Just food for thought.  Cheers!

 

LOL, imagine how crazy the activity would be on this board if that had happened. It would be amazing because Fairfax would not need to stick to insurance and would be able to focus on pure investing and/or acquiring companies outright.

[Partner24]

Oh these activists...

 

First, he's been able to keep the MSFT huge earnings intact, but still have been able to grow them at a very decent pace for a huge company like that.

 

I'm not saying he has not done any mistake with MSFT capital allocation, but nobody's perfect.....

 

....except Warren Buffett  ;)

[txlaw]

Instead of buying Skype, Microsoft could have bought Fairfax for $8.5B!   ;D  

 

- Prem and Hamblin-Watsa could have allocated the capital  

- You have a great leader ready to step in for Ballmer

- And all that free-cash going into insurance and investments

 

While Prem won't sell, how many other companies would be better off just going to Fairfax, offer to buy them, and let them step in.  Wouldn't that make sense for so many companies far bigger than Fairfax?  The problem is that most people just don't want to admit that someone else could do a hell of a better job.  Just food for thought.  Cheers!

 

Yeah, but if you buy that Bill Gates is a really smart guy, like I do, it's likely that the present value of the profits protected from evaporation by the Skype acquisition is much greater than the $8.5 billion paid out. 

 

I mean, the Windows and Business Divisions at MSFT generate profits in one year that is not that far off from the market cap of Fairfax.

[ERICOPOLY]

They shouldn't have anyone manage the money.  It is not a holding company, it is just an operating company that can fractionally be held in the portfolios of capital allocators.

 

Their job at Microsoft is to get that excess cash back into the hands of the capital allocators, not sit on piles of it.  Maybe that means biting the tax bullet when repatriating the cash -- if your typical capital allocator can grow money at least at 10% annualized returns, then the tax hit will be earned back very quickly.

 

My opinion only of course.

[txlaw]

I think in Microsoft's case, they were so busy protecting the moat, that they missed some of the innovation that was going on around them.  They were so late when it came to search, mobile and cloud.  I think they've recognized that in the last couple of years, and have been working on the innovation side again.  But this industry moves very quickly...not like missing out on Gatorade or Frito-Lay in Coca-cola's case.   Cheers!

 

I would agree with that assessment.  

 

The businesses they were trying to protect were some of the best businesses the world has ever seen.  That blinded them to the way things were being disrupted by the ubiquitous connectivity that is only now starting to come to fruition.  

 

They also used their power to control things in a way that hurt consumers in the short run, so I'm glad they have paid for it by being late to the game.

 

 

[Myth465]

I have to admit after watching a few videos of Ballmer 2 weeks ago. I havent thought about MSFT as much.

 

 

The guy is passionate though, crazy passionate  ::)

[Guest VAL9000]

I have to admit after watching a few videos of Ballmer 2 weeks ago. I havent thought about MSFT as much.

 

 

The guy is passionate though, crazy passionate   ::)

These are gold.  The first and the third segments are Ballmer making fun of himself.  He's got a good sense of humour, but definitely comes off as a little imbalanced.

 

Here's the original Windows 1 sales pitch that Ballmer did way back when (basis of third segment above).

 

http://www.youtube.com/watch?v=tGvHNNOLnCk

 

Reversi!

 

 

 

[Myth465]

LOL

 

I think people are too rough on Steve antics aside. His real crime is taking over with a noise bleed stock price.

With Gates approving and discussing major capital allocation I dont know how you can not like Steve but trust Gates.

[turar]

Seems like a lot of those videos are from internal "all-hands" meetings, which are meant to be a little crazy and funny.

[ERICOPOLY]

Seems like a lot of those videos are from internal "all-hands" meetings, which are meant to be a little crazy and funny.

 

That's right.  I went to a few company meetings and he gets all pumped up like that.  He spoke to my smaller product group a couple of times and was more mellow.

 

I was at the Pro Club in Bellevue one Saturday morning bouncing a basketball alone in the gym and he came in with his young kids.  Just seemed like a normal father, said "Thank you" when I sent one of their loose balls back.

 

It was funny when he said "To Heck with Janet Reno".  The media loved that.

 

That woman was such a troll.  Let me ask you... does Apple bundle a browser into every iPhone, or are you meant to download and install one separately?  Seriously, that's what the whole damn thing was all about.  Incredible.

 

 

 

[Parsad]

Microsoft got the idea of smart phone pretty early - in the nineties. They didn't perfect the user interface. They did the tablet in the late nineties/early 2000s which also failed. They were ahead of their time for these.

 

You are correct.  They also created a product called the WebTV a long time ago.  I had one and it worked quite well actually, but way ahead of its time.  Today, everything is going the way of WebTV. 

 

Perhaps, innovate was not the correct word.  More like, they gave up too soon and let competitors latch onto good ideas while making them better. 

 

That woman was such a troll.  Let me ask you... does Apple bundle a browser into every iPhone, or are you meant to download and install one separately?  Seriously, that's what the whole damn thing was all about.  Incredible.

 

Yup!  It was big then, but would be deemed ridiculous today.  If you lobby enough, some politician will pick up the torch.  The public always loves a villain.  Look at Google today...everyone uses their "Don't be evil" philosophy against them.  Soon enough, Apple will be the one everyone hates.  Has anyone seen Southpark's spoof on Steve Jobs and the IPad recently?  Cheers!

[ERICOPOLY]

Do you remember when AOL had their own browser?  Well, it was just the Internet Explorer WebOC control hosted inside their own custom chrome.

 

So without IE components on the machine, you'd break AOL.  Then the govt hired a Princeton computer science professor to show that Windows Update would still work if IE were to be removed.  The punch line is that his program also relied on the IE WebOC control to connect to Windows Update!  All we had to do to prove this to a common layman was launch his app and press CTRL+N.  Out popped a fully chromed IE window that would browse the web.  CTRL+N is the "new window" command.

 

Result?  The media didn't even mention that, instead reported that government had uninstalled IE.  So these days I don't believe the media as much as I did before those times.

[shalab]

Media is always looking for good stories - in the Einhorn case;

Greenlight, a New York-based hedge fund, added 1.39 million Microsoft shares last quarter, for a total of 9.07 million, according to a filing. The stake is worth $230.2 million. Microsoft’s shares have underperformed the S&P 500 in four of the past five quarters.

 

Now Ballmer alone owns 4% of Microsoft. BillG owns about 6.4% - together they make up ~10%. About 40% of the Microsoft shares were held in the seattle area, even with it going down - it is pretty much impossible to dislodge him for Einhorn.