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Why Bill Gates Has a Target on His Back

Why Bill Gates Has a Target on His Back
By Jennifer LeClaire

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The shareholders may want to ensure that the new Microsoft CEO isn't going to repeat the mistakes that they thought Bill Gates made with outgoing chief Steve Ballmer. They may want the company to go more in an Apple direction, which probably wouldn't make much sense based on where Apple is going.
 


Steve Jobs was once ousted from Apple, the company he founded -- Apple. Is Bill Gates next? According to news reports, the Microsoft chairman's place at the table may be at risk.

Reuters is reporting that three of the top 20 investors in Microsoft are lobbying the board to press Gates to step down from the software company he co-founded nearly 40 years go. The wire service cites "people familiar with the matter."

If Gates exits, it would mark a radical change in company leadership, given Microsoft CEO Steve Ballmer's sudden decision to announce his impending retirement. Investors may see now as a strategic time to clean house as the company continues struggling on the mobile front in a post-PC era.

Gates Has Power

Microsoft could not immediately be reached for comment, and declined to discuss the issue with Reuters. The wire service reports that the three investors hold no more than 5 percent of the company's stock and there is no indication that the board will give way to its desire.

For his part, Gates remains Microsoft's largest individual shareholder with 4.5 percent ownership of the company. The company is currently worth about $277 billion, making it one of the most valuable brands in the world. But some investors are apparently not satisfied.

When Ballmer announced his retirement, which is set to happen sometime in the next 11 months, some suggested that Gates should step in as interim CEO until a suitable replacement emerged. A search is underway, and it does not appear that Gates will resume any day-to-day oversight of the software giant.

The Tablet Flop

We asked Rob Enderle, principal analyst at The Enderle Group, for his thoughts on the uprising. He told us many shareholders are frustrated with Microsoft's progress and are looking for someone to blame. Typically, the CEO is held accountable but since Ballmer is stepping down and Gates is tied to his appointment, some are pointing the finger at the industry icon.

"Here's this company that at one time was the most powerful in the technology world and is now substantially off its game," Enderle said. "They probably look back at things, like the opportunity to create a tablet early on to compete with the iPad -- and the connection to Bill Gates as to why it didn't happen. There were other mistakes attributed to Bill Gates' decisions, where Ballmer had deferred to Gates."

What the shareholders may not be considering is that non-executive chairmen don't have much authority over what goes on with the day-to-day company operations. As Enderle sees it, putting a new chairman at the helm of Microsoft isn't going to fix the problems.

The Next CEO

But maybe there's another issue at hand. The disgruntled shareholders may want more control over who is selected as the next CEO. Enderle said they may be concerned that Gates will get the final vote on the CEO -- and they want somebody much more aggressive than he is likely to pick.

"Bill is the guy that would supply continuity. If you remove all continuity from the choice, you could have another Carly Fiorina moment," Enderle said.

"These shareholders may want to ensure that whoever is making the CEO choice isn't going to repeat the mistakes that they thought were made with Ballmer," he added. "They may want the company to go more in an Apple direction, which probably wouldn't make much sense based on where Apple is going."
 

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