NEW YORK - Microsoft CEO Steve Ballmer, known as much for his zany personality as his business discipline, will leave a legacy of mixed results and a monumental challenge for his yet-to-be-named successor.
Ballmer announced on Friday that he plans to retire sometime in the next year. He has worked for the company for 33 years. After helping founder Bill Gates transform Microsoft from a tiny start-up into the world's most valuable company, Ballmer took over for Gates in early 2000.
The new millennium marked a dark period for Microsoft. As smartphones and tablet computers began to eclipse personal computers, detractors say Ballmer didn't take early threats from Apple and Google seriously enough. Ballmer consistently pooh-poohed Google as a one-trick company and in 2007 declared: "No chance that the iPhone is going to get any significant market share."
Microsoft CEO Steve Ballmer speaks at a Microsoft event in San Francisco, June 26. Ballmer, who helped build Microsoft into a technology empire and then struggled to prevent it from crumbling under his own leadership, will retire within the next 12 months. The world’s biggest software company did not name a successor. Microsoft Corp.’s stock shot up 9 percent in premarket trading following the news.
Ballmer's jeers proved premature. Google quickly made important inroads in Internet video, online maps, email and mobile computing and contributed to the damage that Apple's iPhone and iPad have done to Microsoft and its partners in the PC market.
Microsoft, along with other companies that thrived in the era of personal computers, is scrambling to transform its business as people increasingly come to rely on smartphones and tablets.
Although it derives some three-quarters of its revenue from sales of software and services to businesses large and small, Microsoft has failed to capture the imagination of consumers who have become more enamored with mobile gadgets than PCs. Response to the newest version of its flagship Windows operating system, Windows 8, has been lukewarm.
At a Glance: Microsoft CEO Ballmer's ups and downs
Microsoft CEO Steve Ballmer announced on Friday that he plans to retire from the world's biggest software company after more than 13 years at its helm. Here's a look at the ups and downs of his tenure:
- 1980: Ballmer joins the company co-founded by Bill Gates and Paul Allen in 1975.
- July 21, 1998: Widely seen as the successor to chairman and longtime friend Gates, Ballmer is named president of the software company. He'd previously led Microsoft's sales and marketing.
- Sept. 23, 1999: Ballmer warns that technology stocks are overvalued, including those of his own company, in public remarks that help accelerate a sharp sell-off on Wall Street. He blames a "gold rush" mentality for the stock price increases.
- Jan. 13, 2000: Gates promotes Ballmer to CEO of Microsoft while staying on as chairman and chief software architect.
- Nov. 15, 2001: Microsoft releases its Xbox video game system, one of the company's most successful products.
- March 26, 2004: At a conference for online advertisers, Ballmer says Microsoft's biggest mistake was failing to develop its own search engine, which caused it to fall behind rivals Google and Yahoo in the space. "That's probably the thing I feel worst about over the last few years," says Ballmer. Ballmer vows to put more money into research and development of search technology at Microsoft.
- May 4, 2006: Ballmer says MSN Search, Microsoft's search engine, is gaining steam against rivals, but still trails Google and Yahoo.
- November 13, 2006: Microsoft launches the Zune music player, its answer to Apple's iPod. The company discontinues the Zune five years later, in 2011.
- Feb. 1, 2008: Microsoft makes unsolicited offer to buy Yahoo for $44.6 billion. Microsoft withdraws its offer months later due to resistance from Yahoo.
- April 12, 2010: Microsoft unveils the Kin phone, an attempt to compete with Apple's iPhone. The phone was discontinued two months later.
- May 10, 2011: Microsoft announces it will buy Internet phone service Skype for $8.5 billion.
- Oct. 25, 2012: Microsoft holds a launch event in New York for Windows 8, a major overhaul of its ubiquitous computer operating system.
- May 7, 2013: Microsoft says it will retool Windows 8 to address complaints and confusion. Microsoft also discloses that it has sold more than 100 million Windows 8 licenses.
- July 11, 2013: Ballmer announces a sweeping restructuring of the company to cope with the quickening pace of technological change and competitive challenges presented by Apple and Google.
- July 18, 2013: Microsoft books a $900 million write-down for slashing the price of its Surface RT tablet. Its revenue and earnings come short of Wall Street forecasts in the April-June quarter.
- Aug. 23, 2013: Microsoft says Ballmer will retire in the next 12 months after 33 years with the company.
As Microsoft Corp.'s stature diminished its market value followed. When Ballmer took the helm in January 2000, the company was worth more than $601 billion. Today, its value is less than half that amount, at nearly $270 billion.
"There is never a perfect time for this type of transition, but now is the right time," Ballmer, 57, said in a statement released by the Redmond, Wash., company.
Microsoft did not name a successor, but it's certain that the person who takes the reigns will need to push the world's largest software company further into mobile devices and step up its competition with faster-moving rivals.
Microsoft said Friday that it's forming a search committee, which will include Gates. Ballmer will stay on until a replacement is found.
After the news broke, Microsoft's stock shot up as much as 9 percent shortly after the markets opened. They came within two dollars of their 52-week high.
Ballmer's announcement comes less than two months after the company unveiled a sweeping reorganization of its business in an attempt to catch up with Apple and Google.
In his statement, Ballmer noted that Microsoft is moving in a new direction and needs a CEO that will be there for the longer term.
Microsoft, he added, "has all its best days ahead."
Ballmer met Gates in 1973 while they were living down a dormitory hall from each other at Harvard University. He joined Microsoft in 1980 to bring some business discipline and salesmanship to a company that had just landed a contract to supply an operating system for a personal computer that IBM would release in 1981.
Ballmer, a zealous executive prone to arm-waving and hollering, did the job so well that he would become Gates' sounding board and succeed him as CEO in 2000. He has worked at Microsoft for 33 years, matching the tenure of Gates, who left the company in 2008. "It's a tad surprising, but every other business head has been rotated out," said BGC Financial analyst Colin Gillis. "They swapped out all their segment heads over the past few years. The only one they haven't changed is the CEO."
Though investors cheered the news on Friday, Gillis cautioned that it could be a "tough 12 months" for the company.
The obvious successor - former Windows head Steven Sinofsky - got booted by Ballmer, he said.
Sinofsky left the company shortly after the launch of Windows 8 last year. He recently announced that he joined the venture capital firm Andreessen Horowitz.