Top fund manager: Ballmer must go

Greenlight Capital hedge fund manager David Einhorn sees Microsoft's CEO as "the biggest overhang on Microsoft's stock" and says it's time to let someone else take over.

A top hedge fund manager is calling on Microsoft's Steve Ballmer to step aside as CEO and let someone else lead the company.

Microsoft CEO Steve Ballmer
Microsoft CEO Steve Ballmer Microsoft

Speaking at the Ira Sohn Investment Research Conference in New York yesterday, David Einhorn, president of hedge fund Greenlight Capital, was outspoken in his criticism of Ballmer as a key factor holding back the company's stock.

"It's time for Microsoft's board to tell Steve Ballmer, 'All right, we see what you can do, let's give so-and-so a chance,'" Einhorn said. as quoted in a Bloomberg story. "His continued presence is the biggest overhang on Microsoft's stock."

In his criticism, Einhorn pointed to Microsoft's weak R&D efforts as one of several factors, according to The Wall Street Journal. As one example, Einhorn said that even if Microsoft makes a new product, it won't market that product if it competes with Windows.

Ballmer also took his share of blows for being slow to venture into new and cutting-edge markets.

"Ballmer's problem is that he's stuck in the past," Einhorn said, according to Bloomberg. "He's allowed competitors to beat Microsoft in huge areas, including search, mobile-communications software, tablet computing, and social networking."

Last October, Microsoft's own board showed a certain lack of confidence in Ballmer by cutting his 2010 bonus , citing the failure of the Kin, the loss of market share in the mobile phone arena, and the company's failure to jump into the growing tablet arena.

Meanwhile, an ongoing survey by employer review site Glassdoor, inviting comments from Microsoft employees, also found at the time --and continues to find--internal discontent with Ballmer's performance.

Einhorn has been busy scooping up Microsoft's stock for his fund and now owns about 9 million shares of the company, or 0.11 percent of its outstanding shares, according to Reuters.

Many in the investment community see Microsoft's shares as undervalued. Einhorn himself is a proponent of the stock but believes it hasn't performed well as an investment because "Microsoft isn't getting credit for some of its achievements and prospects," the Journal quoted Einhorn as saying. "Microsoft's business has been much stronger than the average company in the S&P in the past five years."

Neither Microsoft nor Greenlight Capital immediately returned CNET's requests for comment.

Update 1:28 p.m. PT: Microsoft's full board, including Chairman Bill Gates, continues to stand by Ballmer in the face of Einhorn's comments, according to Reuters, which cited a source close to the board.

 

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