UCLA Professor: Microsoft CEO Ballmer a ‘hubris-infected serial acquirer’ with dismal track record

“As Microsoft continues to press its takeover bid for Yahoo, Microsoft’s shareholders might be interested to know more about the deal-making history of Microsoft’s chief executive, Steven Ballmer. According to an academic paper that looked at ‘serial acquirer’ chiefs, Mr. Ballmer’s early track record for creating value through acquisitions was pretty dismal,” Andrew Ross Sorkin blogs or The New York Times.

Sorkin reports, “But the working paper, whose lead author, Richard Roll, is a professor at the UCLA Anderson School of Management, also gave a reason to be hopeful: It found evidence that chiefs who make value-destroying acquisitions early on can learn from their mistakes, improving the returns for shareholders in subsequent deals.”

MacDailyNews Take: Richard Roll? Yeah, right, Sorkin. We’re not falling for it this time! Everyone, it’s very important that you watch this short video now.

Sorkin continues, “Called “Learning, Hubris, and Corporate Serial Acquisitions,” the February 2007 paper examined 2,589 chief executives during the period between 1992 and 2002. Out of those, 1,424 chiefs oversaw at least one acquisition.”

“Mr. Ballmer was considered a “hubris-infected” chief under the study’s definition, because of Microsoft’s value-destroying deal to invest $100 million in Vertical Net in 2000. He followed up with deals for Intertainer and BroadBand Office, which also generated below-market returns for shareholders,” Sorkin reports. “In all, Mr. Ballmer made 15 deals between 2000 and 2002, with an average market-adjusted shareholder return of negative 4.59 percent.”

Full article here.

MacDailyNews Take: Steve Ballmer is an excellent CEO, heh, who is making the right decision to go after Yahoo, heh heh, as such an acquisition can only provide wondrous, hee hee! ha ha!, and magical, *snort!*, HA! HA! HA! HA!, ahem, synergies to… aww, forget it. We tried.

53 Comments

  1. Some mental illness at Microsoft. You have Gates saying that Windows 7 will be out next year or so (or so meaning 3 years+), and you have Ballmer thinking Yahoo is the golden goose.

    They seriously need to focus on their primary thing. Software. Get Windows working right. Vista is terrible. Fix it. Now. That should be job ONE at Microsoft. All their funds and focus should be on that, not acquiring Yahoo.

  2. I haven’t looked that deeply into this, but acquisitions and investments are often made to prevent competition for occurring. So these may have been “good” investments for Microsoft after all.

    Remember, Microsoft has been successful largely by making other people unsuccessful. It’s hard to believe that wouldn’t play into their acquisition strategy as well.

  3. This merger makes absolutely no sense. Yahoo isn’t doing that that great. If Microsoft can’t make their own online service work – MSN or whatever it is – how in the heck is acquiring Yahoo (that isn’t doing so great) going to add up to improvement. It isn’t.

    I applaud Yahoo for holding out for more money – I hope they get lots of it. Make MS pay through the nose. Then – Get out and watch MS burn down from a distance. Ha ha ha.

  4. “hubris-infected serial acquirer”

    If by hubris-infected you mean as full of wind as a corn-eating horse and by serial acquirer you mean he routinely unhinges his jaw while tipping over the breakroom refrigerator.

  5. I wonder if somebody hasn’t documented all the acquisitions, then added up all the lost employees of said acquisitions, then given the final total of what MS has done to the corporate business world.

    “Microsoft, we layoff more people than any other company”

    That’s a comforting footnote.

  6. @ Always Brings a Smile Though

    That will be what MS Shareholders will be saying 10 days after Ballmer close a Yahoo deal, ending up paying a lot more for it then first planned. Ballmer will orders all of Yahoo infrastructure be converted to Windows and all mention of Yahoo be removed from everywhere and everything. All the employees will flee and MS will move everything that’s left of Yahoo to Redmond within 6 months.
    In a year tech writers will be what happen to Yahoo? Oh, they when belly up and MS bought them for a bargain price. For getting that MS paid big bucks then sucked Yahoo dry without MS showing any real value for the premium price that they pay.
    MS Stock will still be the same price it is today (+/- a few bucks).

  7. “This merger makes absolutely no sense.”

    Like that matters! When you grunt, point and have a few billion in the bank, you get people’s attention. Folks are too afraid to go out after dark in Redmond.

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