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Market Update

Ballmer Retirement Incrementally Positive for Microsoft

The announcement came as a bit of a surprise, but there may have been some pressure that forced the move, says Morningstar's Norman Young.

Mentioned:

 Microsoft (MSFT) announced today that CEO Steve Ballmer will retire within the next 12 months, as soon as a successor is chosen. We think this is incrementally positive for the firm, as Ballmer has served as CEO since 2000 with a mixed record. Although Ballmer has done an admirable job expanding and nurturing Microsoft's core businesses, several strategic missteps have occurred on his watch. We are leaving our fair value estimate and wide moat, negative trend rating unchanged for now.

This announcement came as a bit of a surprise, so soon after the firm's reorganization announcement in early July. We suspect there may have been some pressure that forced the move, as Ballmer was quoted in the announcement saying that his "original thoughts on timing would have had [his] retirement happen in the middle of [the] company's transformation to a devices and services company." However, we believe the recently announced devices and services strategy will remain intact, given the increasing competitive pressures on the core Windows business.

Norman Young does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.