Influential hedge fund manager David Einhorn has called for Microsoft's chief executive Steve Ballmer to step down, saying the world's largest software company's leader is stuck in the past.
"His continued presence is the biggest overhang on Microsoft's stock," Mr Einhorn said in reference to Mr Ballmer.
The comments by Mr Einhorn, who made his name warning about Lehman Brothers' financial health before the investment bank's collapse, are the most pointed yet from a high-profile investor against Microsoft's leadership.
Microsoft shares, which have been static for over a decade, gained 0.87 per cent in after-hours trading after his comments, the most of any Dow Jones industrial average component.
The software giant, which was the largest US company by market value in the late 1990s, has since been overtaken by Apple and IBM in market value, and is no longer seen as a dominating force in technology after a failure to capitalise on new internet and mobile computing markets.
The stock is down 6 per cent in the last two weeks alone after Microsoft agreed to pay $8.5 billion for Internet phone service Skype, a move which mystified many investors.
Speaking at the annual Ira Sohn Investment Research Conference in New York yesterday, Mr Einhorn said it was time for Mr Ballmer - who succeeded co-founder Bill Gates in 2000 - to step aside and "give someone else a chance."
A Microsoft spokesman declined comment on Mr Einhorn's remarks.
Mr Einhorn's Greenlight Capital hedge fund has been a recent buyer of Microsoft stock, which at under 10 times expected earnings is regarded by many as undervalued.
Greenlight held about 9 million shares in Microsoft, or 0.11 per cent of the company's outstanding shares, at the end of the first quarter, according to Thomson Reuters data.
Mr Einhorn also said it was time for Microsoft to consider strategic alternatives for its money-losing online business, which has so far failed to win share from online search leader Google.
The online services unit, which runs the Bing search engine and MSN web portal, had a loss of $726 million last quarter and has now lost $7 billion in four years.
Bing has made some progress, raising its US internet search market share to 14 per cent from 8 per cent in the two years since launch, but has not taken any share from Google, which has held on to its 65 per cent share, according to research firm comScore.
Mr Einhorn declined to comment further.
On Tuesday, Microsoft was overtaken by IBM in market value for the first time in 15 years, chiefly because of Microsoft's static share price. Apple surged past it last year to become the world's most valuable tech company.
An investor who put $100,000 into Microsoft stock 10 years ago would now have about $69,000 worth.
Reuters
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