Influential hedge fund manager calls for Ballmer to step down as Microsoft CEO

Microsoft shareholder and renowned hedge fund manager David Einhorn has called on Microsoft chief executive Steve Ballmer to resign because the company is failing to keep up with its competitors.

Ballmer took over from Bill Gates as chief executive in 2000, and the firm has since fallen behind rivals like Apple, Google and most recently IBM in market value.

Einhorn made his comments while speaking at the annual Ira Sohn Investment Research Conference in New York, according to Reuters.

"His continued presence is the biggest overhang on Microsoft's stock," Einhorn said of Ballmer, adding that he should "give someone else a chance".

Einhorn is president of Greenlight Capital, which holds a 0.1 per cent share of Microsoft stock. Einhorn famously warned that Lehman Brothers was under-capitalised right before its collapse in 2008.

Angela Ashenden, an analyst at MWD Advisors, suggested that Einhorn’s comments had not come as a surprise.

"This issue has been bubbling for a long time. A lot of criticism relates to the commercial side of Microsoft's business and how it is failing to cut it in consumer search and MSN," she said.

"Things like the Xbox are deliberately branded away from Microsoft as it is not so strong in these areas."

Ashenden advised Microsoft to communicate its internal strategy to the market.

"Microsoft keeps talking about increasing the speed of product updates, but when it comes down to it its still executing two- or three-year release cycles," she said.

Microsoft is also being outmanoeuvred by more innovative firms, according to Ashenden.

"It's not a very innovative company. It has always been a bit of a follower and, although it follows well, it's now beginning to feel a bit creaky," she said.

"For example, the latest version of SharePoint looks like it ticks all the boxes when it comes to features and functions, but it is not as intuitive as the more nimble products in the market."

However, Microsoft still has a chance at competing if it can update its internal processes and culture, the analyst concluded.