Ballmer's Departure:Risk and Opportunity

Microsoft CEO Steve Ballmer is to resign upon his successor's appointment.He has headed the tech titan since 2000.*Ballmer and Microsoft have been laggards,said Matthew McCormick,portfolio manager at Bahl and Gaynor Investment Counsel.It opens up so many doors.You're gonna see some capital returned to shareholders,some new thought and leadership.We think there's gonna be more unlocking of value throughout the tech sector.*They need someone from the outside.They need to make a move.We have high expectations Microsoft is gonna do something big.The tech sector has the best opportunity for growth going forward.*Microsoft's shares have lost 43% of their value since Ballmer took over.Rick Sherlund of Nomura Securities said we don't believe there is a successor in waiting.It's a failure of management.*Dan Niles,chief investment officer at Alpha One Capital Partners,said I think you're gonna get a dividend increase and a buyback increase.It's definitely a short term play.It's more about multiple expansion.*CEO changes are tough when you're in a business like this.The only way Ballmer's gone is Bill Gates wants hime gone.Someone from inside would be a bad decision.I think there are good CEOs out there.They need to look outside the box.They need a fresh perspective,Dan Niles observed.*Ballmer's management system created internal divisions,said Kirk Eichenwald of Vanity Fair magazine.The company needs to be busted up.It has so many divisions that have nothing to do with each other.Focus each division on what it does well,and sell off those that don't do well.*Microsoft(MSFT)

Microsoft's Troubled Road

The declining PC business matters,according to Dan Niles,co-Chief Investment Officer at asset manager AlphaOne Capital Partners.Enterprise is still tied to the PC business.Microsoft missed estimates in all five revenue segments.The problem is,you're gonna have more tablets sold than PCs in Q4. Microsoft is a great cash flow business.It's a software company,but it's on the wrong side of the market.It has a good quarter mixed in here and there.Until they figure out how to have a strong smart phone and tablet,they're on the wrong side of a business transition. Google is in a good spot with Android.Eventually,this mobile transition will run its course.For Microsoft,you need stabilisation in the PC market.In 2-3 years from now,you might reconsider the stock. Mr.Niles,Senior Portfolio Manager of the AlphaOne Satori Fund,has a negative position in both Microsoft and Google. Microsoft is currently undergoing a restructuring,in an attempt to better navigate the shifting business landscape. Microsoft(MSFT),Google(GOOG)