CEO on the hot seat: Steve Ballmer, Microsoft
Microsoft is having trouble extending its dominance to the Net. Ballmer is making smart moves, but needs to prove the stock commands a premium valuation.
By Jon Birger and David Stires, FORTUNE

NEW YORK (FORTUNE Magazine) - CEO Steve Ballmer is wrestling with Microsoft's perpetual problem: extending its near-total dominance of operating systems into the Internet era.

Google owns the Net: The search titan already offers several Web-based programs, allowing users to do everything from send digital photos to create Weblogs -- all without applications from Microsoft.

And the software giant's effort to become the core of the digital home faces fierce competition at every turn, from Apple, Sony, Samsung, and others.

Opportunities

Microsoft is launching "live" versions of the company's Windows operating system and Office software that are transmitted over the Internet, not stored on a PC. Assuming these products are designed well -- and quickly -- Microsoft could dramatically expand its business.

Videogame machines, high-end servers, and other tech goods also offer moneymaking opportunities.

Stock outlook

Microsoft (Research) is rolling out a slew of new products this year, including the latest upgrades of Windows and Office. And those franchises are still huge cash machines.

But Microsoft no longer deserves the rich premium it once enjoyed. At 20 times trailing earnings, the stock is priced about right. Top of page

FORTUNE Investor's Guide: 10 CEOs

YOUR E-MAIL ALERTS
Follow the news that matters to you. Create your own alert to be notified on topics you're interested in.

Or, visit Popular Alerts for suggestions.
Manage alerts | What is this?
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.
Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.