Hedge Fund Manager Einhorn Calls for Ballmer's Resignation: Reports

By Erin Harrison May 26, 2011

In the face of Microsoft’s $8.5 billion pending deal to acquire Skype, hedge fund manager David Einhorn this week called for Microsoft CEO Steve Ballmer to step down, saying the world’s largest software company’s leader is “stuck in the past,” according to several media reports.

“Ballmer’s continued presence is ruining your stock,” Einhorn told investors in Microsoft this week, TheStreet.com reported.

The 42-year-old Einhorn co-founded and has served as the President of Greenlight Capital, Inc., since January 1996, according to his profile on Forbes.

Einhorn is known to be both outspoken and influential – he made a name for himself warning about Lehman Brothers’ financial health before the investment bank’s collapse in 2008.

Other shareholders echoed Einhorn’s sentiments, according to several media reports.

“He brings up a lot of good points. I can’t say I disagree with him,” Greg Estes, portfolio manager with Intrepid Capital, says of Einhorn’s criticism of Ballmer, TheStreet.com said. “Ballmer has done an OK job shepherding that core product suite, like the operating system and Microsoft Office. But there have been a lot of misses along the way.”

“His continued presence is the biggest overhang on Microsoft’s stock,” Einhorn said in reference to Ballmer, Reuters said.

In recent year, the software giant has been overpowered by Apple Inc. and IBM in market value and “is no longer seen as a dominating force in technology after a failure to capitalize on new Internet and mobile computing markets,” said the Reuters report.

The stock is down 6 percent in the last two weeks alone after Microsoft agreed to pay $8.5 billion for Internet phone service Skype, according to several sources.

In its May 10 announcement that it will acquire Skype, company officials said, “Microsoft has a long-standing focus and investment in real-time communications across its various platforms, including Lync (which saw 30 percent revenue growth in Q3), Outlook, Messenger, Hotmail and Xbox LIVE.”

In an effort to enhance Microsoft’s existing portfolio of real-time communications products and services, Ballmer said in a statement that “Skype is a phenomenal service that is loved by millions of people around the world.”

“Together we will create the future of real-time communications so people can easily stay connected to family, friends, clients and colleagues anywhere in the world,” Ballmer said.

Ballmer succeeded Microsoft founder Bill Gates as the company’s CEO in 2000.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO West 2011, taking place Sept. 13-15, 2011, in Austin, Texas. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. To register, click here.

Erin Harrison is Executive Editor, Strategic Initiatives, for TMC, where she oversees the company's strategic editorial initiatives, including the launch of several new print and online initiatives. She plays an active role in the print publications and TechZone360, covering IP communications, information technology and other related topics. To read more of Erin's articles, please visit her columnist page.

Edited by Jennifer Russell

Executive Editor, Strategic Initiatives

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