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"The Social Analyst is a column by Mashable Editor-at-Large Ben Parr, where he digs into social media trends and how they are affecting companies in the space.\nMicrosoft CEO Steve Ballmer must feel like a worn-out punching bag after the week he's experienced.\nBallmer's bad week started when David Einhorn, the founder of the Greenlight Capital hedge fund, called for new leadership at Microsoft.  Einhorn's hedge fund owns approximately 9 million shares of Microsoft, around 0.11% of the company.\n\"Ballmer is stuck in the past and is, at best, a caretaker at Microsoft,\" Einhorn told the audience at the Ira Sohn Conference.\nIt didn't take long for the media to pile the blame on Microsoft's beleaguered CEO. This is certainly not the first time that people have called for Steve Ballmer's head, but the chorus of critics has certainly gotten louder. \nAre the critics right? Should Ballmer get the boot? Does Microsoft need a fresh, new face (or a familiar one) to guide it into a post-PC world? \nLet's crunch the numbers.\nGrading Ballmer's Performance\nSteve Ballmer's tenure at Microsoft is a tale of two conflicting graphs. Which one is more important depends on whether you care more about the bottom line or the company's stock price.\nThe first graph depicts Microsoft's revenue from 2000, when Ballmer took over as CEO, to 2010:\n\n\n\n\nA business lives and dies by its cash flow and revenue, and by that metric, Ballmer has done a good job guiding Microsoft toward steady growth. In 2000, Microsoft earned $23 billion in revenue and $9.4 billion in net income. In 2004, Microsoft garnered $36.8 billion in revenue and $8.2 billion in net income.  \nIn 2010, those numbers jumped to $62.48 billion in revenue and $18.7 billion in net income.  Revenue nearly tripled and income nearly double in a 10-year period, not a small feat for a company as large as Microsoft.  If Ballmer's primary objective was to make sure that Microsoft continued to make money, then he succeeded.\nRevenue and profits aren't the only things the CEO of a major public company has to consider, though.  He or she is also responsible for improving shareholder value by increasing the company's stock price and market capitalization. In that respect, Ballmer has failed. This graph depicts Microsoft's stock price from 1986 to 2010:\n\n\n\n\nAt its peak in 2001, Microsoft was worth approximately $400 billion. On May 26, 2011, Microsoft's market cap was just $208 billion, just over half of that value.  While Ballmer should be given some leeway due to the dot-com bubble and the brutal antitrust investigation of the late 1990s, the truth is that Ballmer has failed to increase shareholder value in the 10 years he has been at the helm.  \nMicrosoft's stock performance is even more abysmal if you compare it to Google or Apple, though.  Apple was worth just $7.64 billion in 2001, but it is now worth more than $300 billion. Google wasn't even a public company when Ballmer took over as CEO, but the search giant now has a market cap of $167 billion and growing. \nThe problem for Microsoft is that investors believe that Microsoft's long-term future is bleak. While its revenue may be growing now, investors believe that PCs are the past and that tablets and touchscreens are the future. As PC sales dwindle, so may Windows sales, and that will be the moment Microsoft starts to panic.\nMicrosoft's Conundrum\nAt this point, Microsoft has four options:\n\n1. Stick with Steve Ballmer.\n2. Fire Steve Ballmer and promote an insider.\n3. Fire Steve Ballmer and bring in an outsider.\n4. Pray Bill Gates wants to come back.\n\nMicrosoft has stuck with the first option for the past 10 years, so let's analyze the other options.  If Microsoft's board decides to promote an insider, say Microsoft Office President Kurt DelBene, he will still have the same problem that plagued Ballmer: a lack of an outside perspective. It's not clear that the radical change needed to make the company competitive in search, mobile or tablets could come from an insider.\nBringing an outsider to a company as massive as Microsoft presents its own set of problems, though. Learning the company's bureaucracy (and then blowing it up) would take a significant amount of time, and by then Microsoft could slip so far behind its competition that it doesn't matter who is at the helm. And any new CEO would have to deal with being in the shadow of Bill Gates. Gates could easily swoop in if he doesn't like the direction an outsider CEO is taking the company.\nSome people have even called for Bill Gates to return to Microsoft, but Gates seems to love his role as the world's most prolific philanthropist. Could he really put his heart and soul into a Microsoft turnaround? If he can't commit 100% of his energy toward Microsoft, his return won't help the company's stock price.\nBallmer Isn't Going Anywhere\nLet's be clear: media pundits and outsiders will not be deciding the fate of Steve Ballmer. Nobody tells Bill Gates who should or should not lead the company he created more than a quarter of a century ago. Ballmer has been ones of Gates's most trusted lieutenants, and unless Ballmer pulls a Mark Hurd, he's going to be the CEO in 2012 and beyond. \nSince Microsoft's Board of Directors has decided to stick with Ballmer, the question they must ask is this: how can Microsoft convince investors that its future isn't a bleak road filled with potholes?\nBallmer and Microsoft's board have not had a good answer to that question in the past 10 years. They had better hope they find one before another decade passes them by."^^<http://www.w3.org/2001/XMLSchema#string>
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