Bottom Line: Ballmer’s retirement is perfect timing

There is never a perfect time for this type of transition,” Steve Ballmer said last week when he announced his retirement.

But as far as shareholders are concerned now is the perfect time. The fact that the shares went up over seven per cent last Friday is evidence of that. The firm, which Ballmer has led for over 13 years, was the undisputed tech leader when he took the helm. Its shares traded at around $58 each, making it the world’s largest company based on market value.

But the world has changed rapidly and Microsoft has not kept up. Under Ballmer’s direction, Microsoft has clung too keenly to the products – Office and Windows – ­ that once made it great, rather than taken a risk on diverting resources to less certain cash cows for the firm.

Its Windows software may still be the number one choice for desktop and laptop computers, but most people now are using smartphones and tablets – a field that Microsoft is struggling to make inroads into.

Ballmer’s departure gives the firm a fresh start to try to take back control of the sector it once led. An outside appointment could be the key way to secure the radical change it needs.

Marissa Mayer’s appointment at Yahoo last year gives some indication of what is possible. A year after she took the top job, the firm’s stock price is up more than 100 per cent, and she has secured some key deals including its acquisition of blog Tumblr.

Ballmer has already declared that Microsoft’s focus will shift towards mobile devices and internet services, but a new leader from outside will be able to execute this strategy without sentiment. A new boss, assuming it is an external appointment, could not come at a better time for shareholders.