Oust Steve Ballmer? Why?

Last month,  Peter Lauria of the Daily Beast wrote an intrigue-filled story chock full of anonymous Tweets and anonymous sniping from competitors arguing that there was a “coup” in the works against Microsoft Corp. (MSFT) Chief Executive Steve Ballmer.   The blogosphere was agog with speculation about Ballmer’s imminent demise until the world’s largest software maker reported better-than-expected quarterly results.

There is some basis of truth to Lauria’s article.  Microsoft reputation in the tech world is of being the old tech dog who needs to learn new tricks in hot businesses such as cloud computing, search or gaming.  Some of that criticism is fair and some of it is not. For now, though, Microsoft can’t do much right to please investors.

Shares of Redmond, Wash.-based Microsoft are down 16 percent this year mainly over concerns about corporate technology spending.  That is bound to pick up as the economic recovery continues to creep along.  Meanwhile, cash flow from operations rose $1.8 billion in the last quarter. Microsoft’s businesses seem to be doing fine.

During the latest quarter, The Windows and Windows Live business saw operating income jump 59 percent to $3.06 billion. Quarterly revenue in the  rose 44 percent to $4.54 billion thanks to the success of Windows 7. The Server and Tools and Microsoft Business Division also posted double-digit gains in both revenue and operating income.  Even the much-maligned online-services division, traditionally a money-loser, saw fourth-quarter revenue rise to $565 million. Its loss grew to $696 million from $585 million.   Revenue at the Entertainment and Devices business grew 27 percent to $1.6 billion. It lost $172 million.

Ballmer’s real strength may have little to do with the figures from the last quarter. He, more than almost any other large company CEO, is willing to give projects in which he believes years to mature. The Xbox franchise may be the best example. Few analysts gave Redmond any chance of catching Sony in the game console business when Xbox was introduced almost 10 years ago. It turned out the Ballmer was right to invest billions of dollars to gain market share. He also has an uphill battle with Bing, but the joint venture with Yahoo! (NASDAQ: YHOO) which took nearly two years of stop-and-start negotiations gives Microsoft it first significant chance to he a reasonable share of the search industry. In other words, Ballmer does not come across as a patient CEO, but by definition, he is.

Replacing Ballmer seems pointless. Given the tech battles it needs to fight in the future, Microsoft needs a seasoned general.  Ballmer seems to be the best they have — at least for now.

Jon Berr