Microsoft promotes Ballmer
Gates to give up management duties to focus on strategies
NEW YORK (CNNfn) - Microsoft Chairman Bill Gates handed day-to-day management of the software company Thursday to his right-hand man, Steve Ballmer, as part of a corporate reshuffling that will allow Gates to focus on long-term strategies.|
Gates, who had been chief executive officer since the company was founded 25 years ago, will retain his post as chairman and add a new title as chief software architect.
Ballmer, 43, who was promoted to president in July of 1998, will add the title of chief executive officer. The Harvard University graduate joined the Redmond, Wash.-based company in 1980.
"This is an exciting evolution for me," Gates said during a press conference, "and a very good transition for the company."
Ballmer, speaking with Stuart Varney on CNNfn, said the move is "absolutely not in any way" related to the government's anti-trust action against Microsoft.
"We have an incredible opportunity...to revolutionize the Internet user experience," Ballmer said. "We need to deliver our next generation services platform in order to do that. And we need Bill Gates 100 percent focused on helping architect that."
As far as Gates' role in any settlement discussions with the government, Ballmer said he and his management team would handle the settlement strategy—quickly adding that "Bill, of course, is a key member of that team."
The announcement came one day after government sources confirmed that Justice Department lawyers have proposed splitting Microsoft Corp. as a remedy for the company's allegedly anti-competitive behavior.
Speaking to reporters at a news conference from Microsoft's headquarters in Redmond, Wash., Ballmer blasted reports of a possible break-up, saying it would be "reckless and irresponsible" for the government to split Microsoft into smaller companies.
The proposal was floated over the weekend at a secret meeting of officials from the U.S. government and 19 states that have sued Microsoft. Ballmer told Varney that a break-up of the company would disrupt the future plans for the company.
Steve Ballmer and Bill Gates at press conference
"It would inevitably and...indelibly cause the strategy to be less important, less useful and less valuable to consumers," he said.
A Justice Department spokeswoman declined to comment on the case, saying "the Department is committed to seeking a remedy that will solve the serious competitive problems reflected in the court's findings by promoting innovation and consumer choice."
"A Personal Decision"
News of a Microsoft press conference fueled speculation of some kind of settlement talks.
"It is a great pleasure for me to announce that Steve Ballmer -- my long-term partner in building Microsoft and a great business leader -- is being named CEO," Gates said in a statement. "I'm returning to what I love most -- focusing on technologies for the future," Gates said. "This was a personal decision, one I have discussed with Steve and our board of directors for some time."
Liam Dalton, chief executive officer of Axiom Capital Management, a private portfolio management firm, said the move shows investors that Microsoft is preparing for whatever happens next.
"The message to the community is, 'we know that we are under a lot of pressure and we're preparing ourselves for whatever the eventuality is,' " he said.
Dalton called Microsoft "the kingpin in the highest margin business in the world" and said it was unlikely the company's stock would be greatly damaged by the government.
"It's a core holding in every technology portfolio, in my opinion, in whatever form it ends up in," Dalton said.
Ballmer will become a member of the Microsoft board of directors, effective Jan. 27.
Ballmer earned his degree in applied math and economics at Harvard University and later worked at Procter & Gamble (PG) as an assistant product manager, according to a company biography. He joined Microsoft in 1980 as assistant to the president and held a number of positions with the company. Among these was executive vice president of sales and support, where Ballmer drove all activities related to Microsoft's sales support and marketing.
In November, U.S. District Court Judge Thomas Penfield Jackson agreed with federal prosecutors in a preliminary finding that Microsoft stifled innovation in the computer industry. Prosecutors have charged the company used its dominant position in operating systems to coerce PC makers to use its software, especially its Internet browser.
A final ruling in the case is due next month.
Microsoft (MSFT) shares rose 2 to 107-13/16 at the 4 p.m. New York close. In after-hours trade, the stock slipped back to 107.