In all the time I've written on Microsoft (Nasdaq:MSFT) it seems like readers/investors always came together on at least one topic – they really didn't like CEO Steve Ballmer. While I think Ballmer has often gotten a bad rap and that Microsoft is better-positioned in enterprise software and services than commonly believed, trying to make that case is tantamount to spitting into the wind.
Under Ballmer's leadership, Microsoft has lost close to half of its value. Again, I think you could argue that almost anybody taking the job was going to preside over a significant erosion in market cap, as Ballmer took the CEO position of Microsoft just three months before the tech bubble peaked. In any case, I will side with the critics who feel that, whatever the quality of Ballmer's vision for Microsoft, he did a poor job of selling the Street on it.
Now they won't have Ballmer to kick around much longer. On Friday morning, Ballmer announced his intention to retire from the job within 12 months, with the exact timing tied to the search committee finding a new CEO for the company. 

SEE: The Path To Becoming A CEO
How Much Is Now Up For Grabs?
It's hard to say much about the new direction(s) Microsoft might pursue with a new CEO, other than to say that I doubt the search committee, which will be headed by independent director John Thompson and include Bill Gates, will look for an executive who wants to completely tear down and remake Microsoft anew. To that end, core products like Windows, Office, SharePoint, and Windows Server are likely to remain key parts of the company's business and future plans.
What's less certain, though, is what will become of the company's efforts to compete with Amazon (Nasdaq:AMZN) and Google (Nasdaq:GOOG) in cloud services. Likewise, the company's mobile and device plans, where the Nokia (NYSE:NOK) partnership and Surface have yet to bear fruit.
I will also be interested to see whether Microsoft reallocates resources and attention to middleware and enterprise resource planning (ERP). SAP (NYSE: SAP) and Oracle (Nasdaq:ORCL) have built large presences in this roughly $45 billion market, but Microsoft's involvement has been modest outside of project management. Likewise in middleware and enterprise process management – Microsoft certainly has a presence here, but companies like IBM (NYSE: IBM) and Oracle have made it a bigger priority and have been rewarded with better growth for doing so.
Were Microsoft's new CEO to decide that these are must-join markets, I wouldn't be altogether surprised if stocks like TIBCO (Nasdaq:TIBX), Software AG, and Sage caught a bid (and perhaps Workday (Nasdaq:WDAY) as well, though that would be an enormously expensive deal).
Hard To Build And Maintain
Even for the underperformance of Microsoft shares under Ballmer's tenure, it's worth remembering that this is a business with a $285 billion market cap and and nearly $78 billion in revenue – almost twice the size of Oracle, three times the size of IBM's software business, and four times the size of SAP.
Then again, Google has about 70% of Microsoft's revenue and has still shown itself to be capable of double-digit growth and aggressive, visionary goals. That's going to put added pressure on the search committee to find a CEO candidate who can make the elephant dance – preserving the valuable cash-generating businesses that Microsoft has built up over the years, but also recognizing the evolution of consumer and enterprise technology and putting the company in position to be as relevant in 2020 as it was in 1990 or 2000.
The Bottom Line
You have to have a thick skin to be an effective CEO, but I still think seeing the shares jump on Ballmer's retirement announcement has to sting his pride a bit. In any case, this marks the beginning of the end of a frustrating era for Microsoft shareholders, and a new opportunity for the company.
I continue to believe that these shares are meaningfully undervalued. Long-term growth of just 3% to 4% is more than enough to support a price above $40, and while value-oriented plays don't really work so well in technology, this could be a good stock for patient GARP investors to consider.
Disclosure – At the time of writing, the author did not own shares of any company mentioned in this article.