Shepherd confesses signing the former Real Madrid striker was the "worst" transfer of his Toon tenure.
He told the Sunday Sun: "It was probably the worst deal I did at Newcastle.
"That is just being frank. We paid £16million and we didn't get £16million worth of value out of him.
"It was a nightmare from an injury perspective.
"And there was no added value off the pitch . . . the added value was nil off the pitch.
"I'm not having a go at the kid as he was fine when he got on the pitch."
Shepherd admits he found the striker a "detached" personality.
He said: "His problems were his injuries - which happen in football - and that he never involved himself with the Newcastle fans.
"As a player I couldn't complain about his professionalism but, as a person, I don't think he did what he could have done for the club with the wages he was paid.
"He could have done a lot more in the community. He could have done a lot more than he did do, which was very, very little. I never got close to him as a player. He was semi-detached, I'll put it that way.
"He didn't communicate with the fans in the way he should have, being paid the money he was.
"You've got to give something back in life and I don't think he did on that side.
"On the field, when I was there, when he played - he was fantastic.
"But look at someone like Les Ferdinand. A big signing, he got into the spirit of the club - Michael never did. He didn't integrate himself into the community.
"His injuries - that is life. But he didn't help himself on the other front."