Microsoft's stock slumped under Ballmer

Published on NewsOK Modified: August 23, 2013 at 5:16 pm •  Published: August 23, 2013

NEW YORK (AP) — When Steve Ballmer took over as CEO in January 2000, Microsoft was the titan of tech and the world's most valuable company.

My, how things have changed.

In the 13 years since Bill Gates handed over the CEO spot, the technology landscape has seen seismic shifts. The Internet bubble popped, erasing paper fortunes built on dot.com companies. Apple's iPods, iPhones and iPads became ubiquitous. Google became a verb. And Facebook turned social networking into something you do by yourself, instead of surrounded by people at happy hour.

The years have been less kind to Microsoft.

"Complacency and a lack of innovation caught up to them," said Yun Kim, an analyst at Janney Capital Markets. "It's their inability to stay relevant beyond the PC."

When Ballmer became CEO, Microsoft had a market value of $604 billion. That heft meant it accounted for nearly 5 percent of the Standard & Poor's 500 index, according to Howard Silverblatt, an analyst at S&P Dow Jones Indices.

Now, Microsoft's market value is $269 billion, less than half of its value when Ballmer came to power. It makes up less than 2 percent of the S&P 500.

When Microsoft announced on Friday that Ballmer would step down within the next year, the company's shares shot up as much as 9 percent shortly after the markets opened. They came within two dollars of their 52-week high. Microsoft rose $2.36, or 7 percent, to close at $34.75.

Under Gates, Microsoft dominated the software industry throughout the 1990s, and the company's soaring stock had far-reaching effects. Newly minted "Microsoft millionaires" left to launch tech companies, venture-capital firms and charities. Paul Allen, a boyhood buddy of Gates' who co-founded the company, bought the Seattle Seahawks and the Portland Trailblazers, and opened a pop-culture museum. Gates used his billions to launch the Bill & Melinda Gates Foundation, which has influenced national and international policy on health and education.

But under Ballmer, Microsoft's stock has been a dud, losing 44 percent during his tenure. Still, dividend payments have compensated for some of the slump. An investment of $1,000 in January 2000 would now be worth just $767 after reinvesting dividends, according to data from FactSet.