Microsoft CEO to retire next year

Associated Press file photo -- Microsoft CEO Steve Ballmer, who spoke at a Microsoft event in June in San Francisco, will retire within the next 12 months.
Associated Press file photo -- Microsoft CEO Steve Ballmer, who spoke at a Microsoft event in June in San Francisco, will retire within the next 12 months.

Microsoft CEO Steve Ballmer, who took over the world’s largest software company from founder Bill Gates 13 years ago, said Friday that he will retire within the next year.

Microsoft Corp. did not name a successor, but the company said it is forming a search committee, which will include Gates. Ballmer will stay on until a replacement is found.

“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.

After the news broke, Microsoft’s stock shot up as much as 9 percent shortly after the markets opened. The shares came within two dollars of their 52-week high.

Microsoft has struggled in the Ballmer era. When he took the helm in January 2000, Microsoft’s market value stood at more than $601 billion. Today, the company is worth less than half that amount, at nearly $270 billion.

The CEO’s announcement comes less than two months after the company unveiled a sweeping reorganization of its business in an attempt to reignite competition with faster-moving rivals such as Apple and Google.

Among Ballmer’s biggest mistakes, detractors say, were his initial dismissals of emerging threats from Google and Apple. He consistently pooh-poohed Google as a one-trick company during its early years and in 2007 declared: “No chance that the iPhone is going to get any significant market share.”

Google quickly made important inroads in Internet video, online maps, email and mobile computing and contributed to the damage that the 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.

In his statement, Ballmer noted that the company 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.

Though investors cheered the news on Friday, Gillis cautioned that it could be a “tough 12 months” for the company.