In July, CEO Steve Ballmer announced a major restructuring plan. In August, Ballmer announced he would be stepping down within a year. And now today there are reports that three of the big shareholders in Microsoft want founder and Chairman, Bill Gates, out.
The reports, which emerged this morning on Reuters news wire, cite sources close to the board who say that the 3 unnamed shareholders who control more than 5% of the company want Gates to step down as Chairman.
Behind the push, the report says, are fears that with Gates still acting as Chairman of the Board, it will be difficult to find the kind of fresh blood that many people believe Microsoft needs.
Specifically, they say, Gates’ presence on the board will curtail the power of the CEO that will ultimately replace Steve Ballmer. With Gates watching, they say, it will be difficult to implement the wide ranging reforms and restructuring needed to pull Microsoft out of the doldrums.
Gates As Shareholder
On the face of it, corporate dramas just do not get any better than this one -- not that there has been a whole lot of drama yet. However, you don’t get rid -- or try to get rid -- of one of the IT industry’s living icons without a considerable amount of clout.
At the moment, support for the push just isn’t there, although that does not mean it won’t be in the future. Currently, Gates has 4.5% of the company while Steve Ballmer has 4%. With Ballmer’s support, Gates doesn’t have to leave until he’s good and ready as the combined shares of the disgruntled shareholders is just over 5%.
But that’s only for the moment and there is clearly a desire for change. When Ballmer announced he was stepping down in August, he also announced that a committee was being set up to find a replacement.
Gates As Chairman
At the time of the announcement, the board said that even if Ballmer was stepping down, it still believed in Ballmer’s recent vision of a company focused on devices, Xbox or software services.
It seems now, however, that the board believes that Balllmer’s successor should not be bound by this vision and some fear that Gates might be instrumental in placing someone in the driving seat that might perpetuate it.
There is also the fact that many see Gates as someone who is out of touch. He may still be the biggest individual stockholder in the company, but his work with the Gates Foundation takes him out of an industry where quick responses and fact action are increasingly important.
Many berate him for keeping Steve Ballmer at the controls for the past 13 years and say that it was on Ballmer’s watch that Microsoft lost its edge as an innovator. They cite stagnant stock prices for much of the last decade as evidence of that.
Whether getting rid of Gates would be anything other than a superficial change remains to be seen, but it's not going to solve Microsoft’s problems.
The market for one of its core products is evaporating at an astounding rate as the bottom falls out of the PC market and the demand for Windows goes with it. It is also under pressure in the cloud space, in the productivity space, and there have also been questions in recent weeks over how much more SharePoint the business market needs.
The question really is what do investors want? Microsoft, no matter what way you look at it, is an extremely profitable company. Currently worth US$ 277 billion, it made profits of US$ 22 billion in the last fiscal year.
But its ability to innovate, which guarantees future profits, appears to be badly compromised. Ten years ago nearly anything that was connected to the Internet was using a Microsoft OS. It’s impossible to say what the figure here is now, but it's definitely considerably less.
It has lost out in the smartphone market to Android and iOS, it has lost the tablet market to iOS too, and Facebook took the lead in the social network market.
While none of this is going to change by getting rid of Bill Gates, such a move could instigate a wind-change across the entire company. But it will require a CEO with vision to start the process. Who that will be is far from decided, but in a mobile world, the betting now must surely be on Steve Elop from the recently acquired Nokia.
Image courtesy of JStone (Shutterstock)