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Post Ballmer, What's Next For Microsoft?

Stocks in this article: MSFTGOOGAAPLORCLCRMAMZN

NEW YORK ( TheStreet) -- "The launch of Windows 8 is the beginning of a new era at Microsoft. Investments we've made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers, and partners."

Those were Steve Ballmer's words only 10 months ago. So it came as a surprise to learn that Microsoft's (MSFT) declared new era will be without Ballmer, who, on Friday, announced that he will be retiring in 12 months.

Several weeks ago, I asked rhetorically "Where's Microsoft Going?" This is a question that I ask every three months upon the release of every earnings report. And following the company's disappointing results for Windows 8 and its Surface tablet, it was clear that patience had its limits. And I believed that the company's board finally realized that if Microsoft was going to ever reemerge as a technology force, it was going to be sans Ballmer.

Under Ballmer's leadership, Microsoft lost roughly half of its value. And following his announcement Friday, given that the stock jumped 7%, which equated to $24 billion more in market cap, there's no point in debating that Wall Street cared very little for Ballmer. Although I haven't been Ballmer's biggest supporter, I've been nonetheless pleased with the manner in which he's been able to maximize Microsoft's profits.

However, that's the extent of any positive remarks that I can say about him. And given how dominant Microsoft was when Bill Gates handed over the reins in 2000, I believe anyone with an MBA could have grown Microsoft's profits just as impressively. You have to remember that PC sales grew at an average of almost 20% per year for 17 years -- from 59 million units in 1995 to more than 350 million in 2012.

Ballmer, unfortunately, has been unable to respond to the decline in PC sales -- to put it mildly. And given his questionable history of execution, the Street never really bought into the idea that Widows 8 or Surface could compete effectively against the products from Apple (AAPL) and Google (GOOG). Although Microsoft still rakes in plenty of cash, success in the technology sector can be summed up in one word -- innovation. And under Ballmer, Microsoft has never demonstrated that it understood the meaning.

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