Ballmer’s Legacy at Microsoft: It’s Complicated, Says Santoli

Mon, Aug 26, 2013, 7:32 AM

Shares of Microsoft (MSFT) rallied more than 7 percent last Friday after CEO Steve Ballmer announced his retirement. Ballmer, who succeeded co-founder Bill Gates as CEO in 2000, has largely been blamed for the tech giant’s poor long-term stock performance and the company’s dearth of innovative products and services.

Yet Ballmer’s “entry point made it impossible for anyone to really succeed,” says Yahoo! Finance Senior Columnist Mike Santoli. “It was at the very peak of the Internet bubble. Microsoft stock was destined to be a terrible investment at the moment.”

Microsoft certainly has had its share of stumbles – the portable music player Zune and most recently its new Surface tablet – but it has also been able to weather the aftermath of the tech crash better than its competitors, namely Cisco (CSCO) and Intel (INTC). Ballmer may have been too focused on defending Microsoft’s turf than creating world-altering devices, but criticism of Ballmer’s tenure has been “a little too convenient and simplistic,” argues Santoli.

As CEO, Ballmer has grown cash flow and developed successful products like Windows XP and the Xbox 360. He led the charge to buy Internet phone service provider Skype for $8.5 billion in 2011. With less than a year on the job remaining, Ballmer’s main priority will likely be finding his replacement, not an easy task for a company as big and as closely watched by investors and the tech industry. Many insiders would love to see Gates return as CEO but the billionaire has already publicly squashed that idea. The best person for Microsoft may be an outsider, someone who can pivot the company away from PCs, says Santoli. And they'll need to answer three fundamentals questions: