Microsoft chief executive Steve Ballmer is to retire within 12 months, the tech company confirmed today.

Shares in the company rose by around 7 per cent following the announcement.

Mr Ballmer (57) said he would step down once a successor had been chosen. In a statement, the Microsoft chief said the company needed a chief executive who would be there longer term for its new direction, and his original plans would have seen his retirement take place in the middle of the company’s transformation.

“There is never a perfect time for this type of transition, but now is the right time,” Mr Ballmer said. “We have embarked on a new strategy with a new organization and we have an amazing senior leadership team. My original thoughts on timing would have had my retirement happen in the middle of our company’s transformation to a devices and services company. We need a CEO who will be here longer term for this new direction.”

A committee has been appointed to appoint Mr Ballmer's successor, chaired by independent director John Thompson. It includes Microsoft chairman Bill Gates, audit committee chairman Chuck Noski and chairman of the compensation committee Steve Luczo.

Mr Ballmer joined Microsoft in 1980 as the company’s first business manager, and became chief executive in 2000.

In an email to staff published by the company, Mr Ballmer said it was an “emotional and difficul thing” to step down.

“I take this step in the best interests of the company I love; it is the thing outside of my family and closest friends that matters to be most,” he said.

Mr Ballmer oversaw the company at a time when it was facing upheaval in a rapidly changing industry. The launch of Windows 8 in October 2012 was intended to propel Microsoft into the new age of tablets and touchscreens. However, it has had mixed success, and recently announced a $900 million writedown linked to its unsold stock of Surface RT tablets.