Microsoft cedes board seat to activist investor Just a week after Microsoft chief Steve Ballmer announced plans for his retirement Redmond has offered activist shareholder ValueAct Capital a seat on the Microsoft board. Redmond announced the "cooperation agreement" in the late hours of Friday afternoon in San Francisco before the Labor Day three day weekend, which is an …
"So less than 1% of stock will get you a seat on the board? I am impressed."
Although I too was struck by this, I was not impressed. I was baffled. How does it happen that 0.8% gets a seat on the board? Could it be the case is that the largest shareholders are (even if their holdings are, comparatively, but a small percent of the total shares) automatically entitled to a seat on the board except if there are compelling reasons to deny them a seat?
Unless Microsoft's rules are unusual, the Board is indeed one man, one vote. The company in General Meeting passes resolutions based upon one voting share, one vote.
The change at MS is really very large. The Board is not huge. It comrpises only 9 people: http://www.microsoft.com/en-us/news/exec/bod.aspx
Whatever your thoughts about MS, this could be the first step their disappearance. Activists is a term of abuse in many eyes. Companies have to be very strong to survive a 'breakup and fire-sale onslaught' by an activist. Strong leadership and strategic thinking is quite a different thing to the activities of most so called activists, In many cases they are no more than equivalent of the corporate grim reaper.
I suspect a break-up and profit maximise route will be taken.
I am not sure how to react to that as I have no love lost for MS. On the one hand, MS employees should be worried, on the other, breaking up MS in to 4 or so separate businesses could be the best thing for MS, its users, and the competition as each would have the incentive to do the best for its customers, and not to leverage sales/lock-in for any other business unit. For example:
Windows (both home & server)
IE and Office (eventually to make them properly multi-platform and totally independent of Windows)
Bing and Azure
Xbox and consumer trivia
Development & management tools for Windows.
@Paul Crawford
It's not as if MS has been re-organised lately to align to an easier split either, is it?
A split may be good, may be bad. Even the renowned might of El Reg's commentards struggled to come up with a good unifying CEO so perhaps lots of "little" billion dollar businesses would work better. I always had the feeling that MS's biggest problem was itself, both in competing with earlier versions of software, and that each bit of it targeted other bits of it rather than what consumers wanted, or the opposition. A split could be a Good Thing™ for MS. Who knows.
You don't have to have any shares to get a seat on the board. Many board members will be employed with no shares whatsoever. They've probably asked them to sit on the board because they feel that their experience can offer something to MS. Much like Apple having had Google staff on their board - although that didn't go too well for Apple, but that's another story.
No, I don't think that is what they are about. I think they see some things they can rehab to get the company back on track. Take a good bump and move on. I seriously doubt they are interested in trying to do a breakup. Just getting rid of Ballmer's "kill Google" fetish might do it. He has been burning a lot of money on that fire.
If it re-incorporates in another country it could be.
Seagate for example moved its head office from the US to the Cayman Islands in 2000, and then to Ireland in 2010. I would imagine those moves were made for tax reasons, but tax is not the only unfavourable legislation you might want to emigrate to avoid.
You can say goodbye to Xbox, Surface and Windows Phone loss making disaster zones I suspect, and Microsoft going back to it's core products that it did well.
(and before the Xbox braindead appear, Xbox is a massive moneypit, it's just Microsoft have creative accountants that hide losses in bad quarters which they unsurprisingly don't shout from the rooftops to report). Investors know where the real money is to be at Microsoft.
For THIS is the moment that Microsoft as an IT heavy-weight ends. Many did not like Microsoft under Bill Gates for all their anti-trust issues, and even more criticised Ballmer's failings but when the financial whiz kids get onto the board... well the phrase 'there goes the neighbourhood' comes to mind.
Whatever way you look at it , when investors get too close to management all you can expect is cuts and company closure within the decade. Profit at all cost will slowly , like countless other companies , erode away all the components that made the company successful. The lack of business sense as far as leading a tech company goes by " investors " is notorious and always end up by dissatisfying everyone. Tech companies are not led by money first , it's ideas first , then money to make these ideas happen. What's left is best stashed away as funding to make more big things happen , not lining the pockets of " investors " and leaving the company activities underfunded and eventually leading to massive layoffs and eventually the shutdown of the company. I am sure you remember a few good examples yourself. This is very very bad news for MS .
It takes a lot of money to buy a significant amount of MS stock, unless you bought (and held it) from a long time ago.
Normal accountancy rules you needs at least 20% for serious influence and 51% for control.
"Slice and Dice?" One can hope so. But yes the classic moves from here are a)Cull the loss making divisions b)Cut the R&D budget, although in MS's case that's more like cut the innovative-companies-we-can-buy-cheap budget.
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