When Microsoft Corporation (NASDAQ:MSFT) CEO Steve Ballmer announced late last week that he was retiring, investors were shocked. But is it possible that the activist investment firm ValueAct Capital had something to do with it? All Things D reports that concerns about a proxy battle were one of the concerns cited by the company when deciding to speed up his retirement.

Steve Ballmer Microsoft

I questioned whether the firm was involved last week right after Ballmer’s retirement was announced.

Over the weekend, Kara Swisher of All Things D reported that sources said Ballmer’s retirement was sped up, first by him and then by the company’s board. One of the concerns they cited was the possibility of a “nasty proxy fight.” Other concerns are listed as the company’s continued declines in business performance and signs that Ballmer’s leadership “was becoming a very obvious lightning rod.

Nomura upgraded Microsoft pre-announcement

Nomura analysts Rick Sherlund, Frederick Grieb and Xiaoyan Zhang issued reports to investors right before and right after Ballmer’s retirement was announced. Interestingly enough, they upgraded Microsoft Corporation (NASDAQ:MSFT) to Buy on Thursday, the day before the announcement about Ballmer.

They cited benefits from ValueAct’s involvement and said that it might be better for Microsoft to go ahead and nominate the firm for a board seat and “have them work behind closed doors” rather than engage in a proxy battle. Speculation about ValueAct going activist on Microsoft has stretched back since at least May.

Governance changes expected at Microsoft

After the announcement about Ballmer’s retirement, Sherlund issued a report focusing on the implications of his retirement. Although he stopped short of suggesting that ValueAct had anything to do with it, he did say ValueAct’s agenda for enhancing shareholder value may now be adopted and that the firm might have secured a board nomination from Microsoft Corporation (NASDAQ:MSFT). He also said there could be “additional shareholder enhancing changes upcoming, including potential significant share repurchases and dividend increase.”

Nomura analysts maintained their Buy rating and $38 per share price target on Microsoft. They noted that if ValueAct will receive a board seat nomination, it should be disclosed in the proxy statement for mid-October. If not, then we should hear of a proxy battle between ValueAct and Microsoft not long after the firm notifies Microsoft of its intention, which must be done no later than August 30.

“Either scenario would likely be favorable for the stock, although a proxy battle would likely convey details of the ValueAct agenda to the public and be more of a near-term catalyst for the stock,” they wrote.

The analysts also pointed ahead to the Sept. 19 analyst day at Microsoft, which will happen on the same day as the company’s usual annual dividend increase.

Microsoft needs a better devices strategy

Raymond James analysts Michael Turits and James Wesman also issued a report to investors after Ballmer’s retirement was announced. They have a Market Perform rating on the stock and believe that the company needs a better devices strategy—something a new CEO would be able to do after Ballmer is gone. Interestingly enough, Friday’s announcement about Ballmer included a small phrase which has been loosely interpreted to mean that Microsoft Corporation (NASDAQ:MSFT) will be shifting its focus from software to “devices and services.”

Raymond James analysts believe the current devices and services strategy at Microsoft will stay the same, based on what board members said. They believe cloud services would be “the right strategy” rather than devices, although that comes with increased capital expenditures and margin risk, two items which the company will have to address at its analyst day next month.

Who will Microsoft’s next CEO be?

Many industry watchers are weighing in on who will be Microsoft Corporation (NASDAQ:MSFT)’s next CEO. Raymond James analysts believe Satya Nadella, who’s currently executive vice president of the company’s Cloud and Enterprise Group, is the “strongest internal candidate” to replace Ballmer.

Shares of Microsoft fell 1.5 percent in Monday morning trading after Friday’s incredible rally sparked by the news about Ballmer.