Microsoft CEO Ballmer to retire in 12 months

The software company said its board had appointed a special committee to direct the process of appointing a new CEO

Microsoft Corp Chief Executive Officer Steve Ballmer, who has struggled to adapt the world's largest software maker to the shift away from personal computers and toward mobile devices, will retire after more than a decade at the helm.

Ballmer, 57, plans to step down within 12 months, Redmond, Washington-based Microsoft said on Friday in a statement. The company's lead independent director, John Thompson, will oversee the search for his successor, heading a committee that will also include Microsoft co-Founder Bill Gates. Investors applauded the move, sending the shares up as much as 8.7 per cent.

The announcement comes six weeks after Ballmer streamlined the company’s management, spurring speculation that he was grooming successors. He cut the number of business units to four and said Windows chief Julie Larson-Green would oversee all hardware, including the Surface tablet and Xbox console and related games. Windows Phone software head Terry Myerson gained responsibility for the Windows and Xbox operating systems.

“There is never a perfect time for this type of transition, but now is the right time,” Ballmer wrote in a memo to employees today that was posted on Microsoft’s website. “We need a CEO who will be here longer term for this new direction.”

Ballmer took over the CEO role in 2000 from Gates, his schoolmate at Harvard University. While Ballmer had a boisterous style that made him legendary at company presentations, he largely remained in Gates's shadow. Ballmer wasn't seen as possessing the same vision for technology or the ability to anticipate changes in the industry, said Richard Williams, an analyst with Cross Research in Millburn, New Jersey.

“Ballmer was more the executive than the visionary and he missed a few turning points that visionaries wouldn't have,” Williams said.

Microsoft has lost almost half its value under Ballmer’s leadership, and the shares haven’t closed above $50 since his first year on the job. The company’s latest computing operating system, Windows 8, also hasn’t spurred the comeback that executives were aiming for. After Friday's announcement, the stock jumped 7.1 per cent to $34.69 at 10:21 am in New York.