Hall of shame

Microsoft: Microsoft has missed too many opportunities under Steve Ballmer’s stewardship. It's a fair criticism reignited this week by hedge fund boss David Einhorn’s call for the software giant's chief executive to step down. But that alone doesn’t necessarily mean Ballmer will, or should, be in line for the chop. Using one significant measure, other long-time US bosses — including Jeff Immelt at General Electric — have fared worse.

Ballmer started as CEO in January 2000. Over the last decade, Microsoft’s shares have tumbled about a third, while they’re up only a hair over the last five. The potted narrative is that Ballmer has shepherded the “old” operating system and productivity software powerhouse reasonably well but misjudged new developments in computing and the Internet, wasting billions of dollars along the way chasing Silicon Valley innovators like Apple and Google.

It would be a lot to expect for a single company to dominate more than one truly world-changing technology. But with that caveat, the Ballmer takedown is on target, even if he’s far from the only US CEO who has struggled to make the most of a franchise. And Ballmer at least saw the need to pay dividends a few years earlier than, say, John Chambers at Cisco Systems.

On a total return basis including those payouts, Microsoft shareholders are down just over 10 per cent over 10 years, and better off by some 14 per cent over five, according to Thomson Reuters Datastream. That’s far from gratifying, but easily beats Cisco. Looking further across corporate America, Ballmer stomps Immelt’s decade-long reign at GE and outdoes Rupert Murdoch’s latest five-year stretch at News Corp. Richard Fairbank at Capital One Financial and Steven Burd at grocery chain Safeway, two other corner-office fixtures, also have fallen short of Ballmer’s performance.

This report card damns Ballmer with faint praise. His problem isn't so much shrinking profits as a loss of investor faith in Microsoft, whose price-to-earnings ratio is one of the lowest among big US companies. Einhorn probably won’t quickly get his wish for a replacement. Ballmer and Microsoft Chairman Bill Gates go way back and together own more than 10 per cent of the company. That means Ballmer probably has more time to reinvent Microsoft more persuasively.