Microsoft CEO Steve Ballmer to retire in 2014; no successor named

With Microsoft’s business experiencing a painful transition, the company announced Friday that Chief Executive Steve Ballmer will step down in the next 12 months.

“There is never a perfect time for this type of transition, but now is the right time,” Ballmer said in a news release. “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.”

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The statement seems to imply that the timing was not Ballmer’s choice, but it was unclear whether he had wanted to leave sooner or was being asked to go.

“This came very sudden and wasn’t of Ballmer’s choosing,” said Patrick Moorhead, principal analyst at Moor Insights and Strategy. “Any time there is an extended search announced, it means that it hasn’t been planned.”

The surprise announcement comes just a few weeks after Microsoft announced that it was taking a $900-million write-down due to unsold inventory of its new Surface tablet.

That was just the latest indication that the company’s radical overhaul of its products, and the launch of the redesigned Windows 8 operating system last year, were struggling to gain traction.

Over the past year, Microsoft has rebuilt nearly every one of its major products in an attempt to better position the company to compete in the mobile computing era.

The big initiatives included a push to launch its own hardware, such as the Surface tablet, and to introduce a new look for Windows that featured “live tiles” to appeal to users of touchscreen products. There was also the introduction of a Windows 8 phone, which included a major partnership with Nokia.

However, the company faced heavy criticism as the new products underwhelmed. It also came under pressure from its traditional partners as sales of PCs declined at record rates this year.

This summer, Microsoft announced that it would release a new version of Windows to address some of the complaints.

“What forced the board’s hand was the $900M write-down in Surface RT product, and what exasperated the firing was the lack of success of Windows 8 to rejuvenate the PC market and Windows Phone’s micronic market share,” Moorhead said in a report.

No successor was named. The company said its board was establishing a committee to search for a new CEO. Among the members of the committee is Microsoft founder Bill Gates.

“As a member of the succession planning committee, I’ll work closely with the other members of the board to identify a great new CEO,” Gates said in the release. “We’re fortunate to have Steve in his role until the new CEO assumes these duties.”

The announcement comes just a few months after Microsoft announced a major reorganization of its divisions and executive positions. It’s unclear whether any of the top lieutenants named in that shuffle will be considered as candidates.

Microsoft’s stock was up $2.26, or 6.99%, to $34.65 in midday trading Friday.

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