Following Tuesday's disappointing Yahoo! ( YHOO) earnings, we'll see many press articles Wednesday congratulating Microsoft ( MSFT) CEO Steve Ballmer for walking away from the $31-a-share deal to acquire Yahoo! a few months back. Jerry Yang and his board will be pilloried again for their arrogant decision to dismiss the buyout offer.

Yet, shareholders might soon plant a bull's-eye on Ballmer's back.

Microsoft's stock sits around $24, as it did in 1998. Like the S&P 500's returns over the past 10 years, you could also refer to that period as Microsoft's lost decade.

Microsoft has more revenue, more businesses and more employees today than in 1998. But with this, it has become more bureaucratic. It's paid out dividends and bought back stock with its considerable cash hoard. And shareholders see its grip on the PC loosening as the world moves to Web services, and Microsoft is a distant competitor to Google ( GOOG) in that sphere.

Although some Microsoft shareholders I spoke to this summer were pleased that the company abandoned its foray to purchase Yahoo! at a significant premium, Ballmer's reputation among his shareholders was damaged from that episode.

More than ever, Microsoft shareholders are wondering where Ballmer is leading the company. Will Microsoft be a large cash-cow conglomerate that pays a nice dividend and grows much more slowly?

Will it make a splashy and expensive acquisition of Yahoo!, Research In Motion ( RIMM), or SAP ( SAP) to try to keep up a faster rate of growth? Or will it be stuck in the middle of those two very different strategies, trying to do both?

It's up to Ballmer to articulate first to his board and then to shareholders (and potential shareholders) what his plans are. Eight years into his tenure, he hasn't done this.

A classic stereotype about CEOs is that those who come from a sales, engineering, or finance background tend to be more short-term focused and analytical. Those from marketing or a variety of functional background experiences tend to be more strategic and long-range thinkers. It's not either/or, of course, as the best CEOs have a combination of short-term decision-making and street smarts, balanced with a long-range vision.

Ballmer is often described (even in his official corporate bio) as ebullient, hard-charging, passionate and dynamic. These are all fine characteristics, but clearly he's not spent enough time with shareholders selling the overall plan for Microsoft.

If you're a value institutional investor and buy into Microsoft now because of its low price-to-earnings ratio and dividend yield, you face the possibility that Ballmer might change the rules of the game next week with another "transformational" acquisition. This "undefined strategy risk" is a weight on the stock price.

Ballmer can easily correct this problem, and Microsoft has such wealth, talent and market leadership that it cannot be counted out. Despite Ballmer's enormous personal wealth, it's likely he views the next 10 years of his career as the most important. This is his time to step out of Bill Gates' shadow and truly leave his mark on Microsoft.

I believe the "growth model" of Microsoft is a more compelling vision than the "utility model." To execute that vision, he will probably need to shed some businesses to increase its focus.

We'll see whether Ballmer can make this elephant dance.

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At the time of publication, Jackson's fund owned no Microsoft or Yahoo! Jackson still personally holds a small long position in Yahoo! in his personal account.

Eric Jackson is founder and president of Ironfire Capital, LLC, and the general partner and investment manager of Ironfire Capital US Fund LP and Ironfire Capital International Fund, Ltd.

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