The investment community likes Steve Ballmer. He's competent, aggressive and occasionally crazy. He's been at Microsoft's helm for eight years, during which time the technology landscape has drastically changed several times over. And although Microsoft hasn't always kept up, it has remained ridiculously profitable.

But Wall Street loves a winner, and what happens when one of the most-feared companies in the world becomes a limp, lame underdog? Nothing good. And it usually starts with the CEO's ouster.

"This is a company that screwed up a real important product transition, and you've got to lay the majority of the blame at the foot of the CEO," says Paul Kedrosky, a venture capitalist and blogger.

To be fair, there is nothing in Microsoft's financial results that suggests turmoil – third-quarter earnings topped Wall Street estimates, and the outlook was decent – but we'd still venture to guess that Steve Ballmer's days as CEO are numbered, thanks to a potentially botched Yahoo takeover, the abysmal Windows Vista release and a floundering web strategy.

It was on Ballmer's watch that Microsoft developed the Windows Vista operating system, arguably one of the most disastrous product releases in the company's history. From a financial standpoint, Vista has generated billions of dollars in free cash flow, but the product was very late, sales have been disappointing and it's unpopular.

"If [Microsoft] put out a great product it might improve their branding, but financially you get diminishing returns on improving Vista since it already sells so well," says Toan Tran, an equity strategist at Morningstar, an investment research firm.

The operating system took five years to roll out, during which time PC sales growth stalled. And now, nobody really wants Vista, as evidenced by throngs of Windows users' decision to downgrade to Windows XP.

"I saw an early preview release [of Vista] in October 2003, and it was strategically brilliant, but it was too ambitious," says Brent Williams, an analyst with Benchmark Co. "It would have obliterated competition once and for all, but they never would have been able to ship it. Almost at once they started throwing features out."

The Vista release is just the tip of the iceberg. Ballmer's handling of the $40-plus billion Yahoo takeover was also mismanaged from the very beginning.

"Ballmer has gone way above the call of duty to screw this up," Kedrosky says. "There was lots of chatter about how Microsoft had offered a deal closer to the $40 [per share] mark, so Microsoft made the mistake of prematurely indicating what [it] wanted to do, and now Yahoo feels like they're getting screwed. [Microsoft] is sending out all these mixed messages – it's crazy. Especially if you're dealing with a passive-aggressive like [Yahoo CEO] Jerry Yang, who is essentially hiding in his fortress in Sunnyvale."

But it's not just how Microsoft has handled the takeover attempt that has drawn criticism, the reasoning behind the acquisition is equally questionable.

"It's pretty much the worst idea ever," says Tran. "MSN basically died on a vine under Microsoft's bureaucracy. If Microsoft swallows Yahoo, it's going to die on the vine, too."

There are two major reasons for keeping Ballmer around: 1) There isn't an obvious replacement, and 2) It's not clear that anyone could get Microsoft out of its current strategic mess. But if we were talking about any other company, Ballmer would have been kicked to the curb already – other CEOs have gotten canned for lesser crimes.

Photo: Flickr/Erwin Boogert