Steve Ballmer to retire from Microsoft: this week in the economy(Read article summary)
A controversial CEO, Ballmer has struggled to keep Microsoft relevant as the Internet and smartphones pass the PC by. Also this week: Fed minutes released, housing sales send mixed signals, J.C. Penney gets 'poison pill.'
Microsoft CEO to retire, market cheers: When Microsoft CEO Steven Ballmer announced Friday that he will retire within the next 12 months, or as soon as a replacement is found, Microsoft stock shot up as much as 9 percent. Wall Street has not been enamored with Microsoft since Mr. Ballmer succeeded founder Bill Gates as CEO in 2000. The software company's value has fallen by more than half in that time – from $601 billion to $270 billion. And while some of that decline can be attributed to the popping of the dot-com bubble, it's also true that Microsoft has fallen behind in key areas of high-tech growth, including Internet search, smartphones, and social media.
Analysts blame Ballmer for underestimating the competitive threats from the likes of Apple and Google. The company is now having to play catchup with the Windows phone and Bing, which have failed to gain much traction in the marketplace. Even the newest iteration of its flagship software, Windows 8, has met with underwhelming sales, forcing the company to rework the interface in an update due out Oct. 17.
"There is never a perfect time for this type of transition, but now is the right time," Mr. Ballmer said of his upcoming retirement in a statement. He did not groom a successor. The company's search committee, which will include Mr. Gates, will look for the struggling company's next leader.
Fed minutes released: The Federal Reserve released the minutes from its July meeting, as investors and financial markets looked for clues that the Fed would ease up on its bond purchases in the near future. The minutes gave little signal either way, but reiterated, “If economic conditions [improve] broadly as expected, the Committee [will] moderate the pace of its securities purchases later this year.” But the Fed will continue its support for the moment, buying approximately $40 billion in mortgage-backed securities and $45 billion in Treasury securities each month. For more on the Fed minutes, read Monitor reporter Mark Trumbull’s Wednesday story.
J.C. Penney adopts “poison pill” to prevent a buyout: Department store J.C. Penney is devising a plan to prevent any takeover attempts by putting a “poison pill” into place. The plan allows shareholders to buy up stock at very low prices if someone acquires more than a 10 percent stake in the company. It’s the second time the struggling retailer has enacted such a plan since 2010, when investor Bill Ackman bought up company shares. Mr. Ackman resigned from J.C. Penney’s board earlier this week.
Jobless claims rise: The number of people applying for unemployment benefits rose by 13,000 to 336,000 claims last week, but the four-week moving average was down by 2,000 to 331,000 claims. This was a hopeful sign, – the four-week average is generally seen as a more reliable indicator of the job market’s strength.