News

Forbes: Steve Ballmer the 'Worst' CEO of a Public U.S. Company

• By Gladys Rama
• May 16, 2012

Forbes magazine has given Microsoft CEO Steve Ballmer the dubious honor of being the No. 1 CEO "who should have already been fired."

Four other CEOs made Forbes contributor Adam Hartung's list: Cisco's John Chambers (No. 5), General Electric's Jeffrey Immelt (No. 4), WalMart's Mike Duke (No. 3) and Sears Holdings' Edward Lampert (No. 2).

Hartung's reason for choosing those five executives is that they "are doing horrific damage to their companies, hurting investors, employees, suppliers and the communities that rely on their organizations." The biggest offender is Ballmer, according to Hartung, who opined, "Without a doubt, Mr. Ballmer is the worst CEO of a large publicly traded American company today."

Under Ballmer's stewardship, Microsoft has been shut out of the technology sector's most promising and fastest-growing segments, particularly tablets and smartphones, Hartung said, with the results being less-than-stellar profits both for Microsoft and partner companies like Nokia. The smartphone manufacturer, which last year committed to producing smartphones running Microsoft's Windows Phone operating system instead of the Symbian OS, reported a $1.7 billion loss in its most recent financial quarter.

Microsoft's product releases, like its share price, have gone downhill since Ballmer took the helm as CEO, Hartung contended, pointing to Windows Vista's release as a particularly low point. "By Mr. Ballmer's own admission Vista had over 200 man-years too much cost, and its launch, years late, met users avoiding upgrades," he wrote.

Hartung also described Windows 7 and Office 2010 as products that "did nothing to excite tech users, in corporations or at home." However, Windows 7 and Office 2010 have generally been stalwart revenue sources for Microsoft; in its latest earnings report, Microsoft credited Windows 7 and Office sales for its Business Division's 9 percent year-over-year growth. Additionally, Windows 7 has been steadily gaining on Windows XP in worldwide market share, and Microsoft has touted Office 2010 as the fastest-selling version of the suite.

Hartung is not the first to call for Ballmer's ouster. Last year, high-profile hedge fund manager David Einhorn publicly stated that Ballmer should step down. "His continued presence is the biggest overhang on Microsoft's stock," Reuters quoted Einhorn as saying.

Anecdotal reports also suggest that some of Microsoft's own employees may be less than supportive of Ballmer. In April 2011, for its most recent "Tech CEO Report Card," Glassdoor.com found that Ballmer received a 40 percent approval rating from Microsoft employees -- the lowest of the 12 CEOs graded in the report. And at last year's annual company meeting, Microsoft employees allegedly exited "in droves" during Ballmer's speech.

There are other trends that could potentially spell trouble for Ballmer and Microsoft. Early this year, research from Forrester suggested that Microsoft's late entry into the tablet market has already cost it consumers' interest. Apple continues to make inroads into the enterprise, once Microsoft's domain. And on Tuesday, a report by the American Customer Satisfaction Index (ACSI) indicated that Microsoft's consumer satisfaction rating fell three points between 2010 and 2011 to just 75, its lowest since 2009. The ACSI pointed to the growing popularity of mobile devices -- a market that Microsoft has struggled to penetrate -- as the reason for the drop.

"So today Microsoft, after dumping Zune, dumping its tablet, dumping Windows CE and other mobile products, is still the same company Mr. Ballmer took control over a decade ago. Microsoft is [a] PC company, nothing more, as demand for PCs shifts to mobile," Hartung wrote.

Microsoft's mobile troubles have translated into financial loss for Ballmer; in Microsoft's 2011 annual proxy statement, Microsoft's board cited "lower than expected initial sales of Windows Phone 7" and "the need for further progress in new form factors" as reasons for denying Ballmer the highest possible bonus.