No hope for Microsoft and it is not Ballmer's fault
The internal structure of the company is ossified. Too many layers of management, too much politics and back-stabbing.
The developers! developers! developers! developers! have gone elsewhere. They prefer more exciting platforms and frameworks to work on (mobile apps on android and iphone, open-source frameworks like Ruby-on-Rails, etc.)
The software is too bloated and complex from years of legacy-preservation and patching upon patching. At this stage the only real hope is to rewrite it from scratch.
Some of the biggest cash cows like MS-Office are being cannibalized by free alternatives (Open Office) and web apps like google docs.
The core cash cow (Windows) is being marginalized, because, let's face it, today the more relevant "OS" on the desktop or smart-phone, is made up of the network and the browser. Nobody cares what the underlying OS is. Plus, the underlying OS on the other side (the server) is mostly Linux (Google, Facebook, The Reg, etc.)
The best technical employees have long moved on. When you have 98% of the market and inferior offerings, it is very hard to grow, and when there's no growth, there's no hope for the pawns via stock options.
It is not Balmer's fault really. There's no one, not even Harry Potter who can bring about the transformation miracle after being dealt such cards. It is going to be a slow and very long decline to complete irrelevancy.
Tux because I haven't felt the need to use any of their products for 16 years now.