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The new Microsoft Surface has plenty of central display space.Peter Power/The Globe and Mail

Windows 8! The Surface! Coming soon, a new Xbox! What a year for Microsoft! I kid, I really do. Because Microsoft Corp. is stumbling to the close of yet another year as a tech laggard, an afterthought to Apple Inc., Google Inc., et al.

It's time for Microsoft to do one of two things: Admit that it's the equivalent of a slow-growth utility and start paying significant dividends. Or find a new CEO to replace Steve Ballmer and completely change the culture.

I've harshed on Microsoft once before, here I said "I am so often tempted to recommend Microsoft Corp. stock, because I see all that cash on the balance sheet, and the cash flow, and that cash dividend, and, because … cash.

"And then I use a Microsoft product and the urge deserts me."

Actually, there was another thing in my mind, at least in the last couple of years: A devastating Fortune magazine article, published in March 2011, about the culture of innovation – or, perhaps more accurately, the anti-innovation culture at the company.

The article details how the company came up with a dazzling prototype for a tablet in the months prior to the debut of Apple's iPad – and then saw Ballmer kill it because it had a new operating system, similar to Windows, but separate from it.

"But the root of Microsoft's paralysis seems to be Ballmer himself … Former employees and analysts say Ballmer's deep pride in Microsoft leads him to dismiss rivals' good ideas ("There's no chance that the iPhone is going to get any significant market share") and to suffocate anything, such as [the tablet prototype], that might detract from Windows, despite the billions the company spends each year on R&D and acquisitions."

Windows 8, is, as we say, fresh and innovative by Microsoft standards. The company released it this fall to much hype. Microsoft shares are up just under 8 per cent in 2012, including dividends, versus more than 13 per cent for the S&P 500.

Meanwhile, the company has $53.7-billion in net cash (cash and short-term investments minus long-term debt), which works out to more than $6 per share. The 23 cents-per-quarter dividend is less than half the company's earnings. And the company hasn't paid a special dividend in eight years.

Shareholders who bought on Ballmer's first day 13 years ago are down nearly 40 per cent. What's going to change that track record? Besides, maybe, regime change at Microsoft.

READERS: Is the problem Ballmer? What would it take to get you excited for Microsoft stock?

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