Who's the Best Pick for Microsoft's New CEO

Microsoft  (NASDAQ: MSFT  )  shareholders should hope the soon-to-be-vacated CEO job falls to Stephen Elop, especially in wake of the recent purchase of Nokia's  (NYSE: NOK  ) handset and services business.

Alan Mulally
Several major shareholders are pushing for Alan Mulally, Ford's (NYSE: F  ) popular turnaround CEO, to take over.

Mulally, being a personal friend of Bill Gates and Steve Ballmer, is certainly in the running, but would not be the optimal choice. Mulally did well at Boeing, before moving on to Ford where he successfully turned the failing company around, and positioned them so that Ford was the only U.S. auto manufacturer who did not need government assistance during the financial crisis.

Mulally is 68 years old, and to his credit, he was very successful at two large manufacturing companies and engineered Ford's drive back to the top, he lacks experience in the fast-paced and changing world of software. Think about the new competition Mark Zuckerberg is faced with on a daily basis. Many analysts decried his billion dollar purchase of Instagram, yet today many have conceded Instagram keeps Facebook properties relevant among teens.

Microsoft is a sprawling tech empire, and the learning curve for Mulally would be very steep and potentially costly for shareholders. The barriers to entry into capital intensive industries are far higher than software.

Stephen Elop for CEO
Elop, on the other hand, is nearly twenty years Mulally's junior and grew up in Microsoft's corporate world (and indeed, is also a large shareholder), and considering Elop received a $25 million package when Mr. Softy purchased Nokia's handset business, it seems to be a strong indication the company desires to retain his services.

Further, many people blame Elop for Nokia's eroding share price, bolstered recently by Microsoft's purchase. News flash: Nokia was on a steep downward slope when Elop got there. He easily could have maintained the status quo, but instead took the very brave move of aligning Nokia with Microsoft, as really the only Windows phone producer. He arrived on a sinking ship, and managed to salvage some value for shareholders.

Yes, many Finns are unhappy with his tenure there, but would anyone have paid as much as Mr. Softy if they were competing in the Android marketplace? The fact is, Elop deserves respect for a courageous move in what was likely no-win situation. 

Microsoft is not in danger of going out of business any time soon, but it definitely needs a leader who won't just maintain the status quo, as Windows and Office profit centers are under severe attack from Google and Apple

Nokia patents
As deal with Nokia with 8,500 phone patents and 30,000 utility patents clearly shows. Microsoft fully understands their profit centers of Windows and Office are under attack as the world goes mobile, especially with Apple releasing iWorks for free for their users, partially negating the one advantage the Surface tablet had-- the Office suite they refused to license to Apple. 

These newly acquired patents will allow Microsoft to focus on the mobile market space, and frankly, likely do more patent trolling that has yielded significant results for shareholders- Microsoft generates more revenue from each sale of an Android phone than Google does. 

Bottom Line
The Nokia deal was a big buy for Microsoft, and the transition is unlikely to go smoothly, as is the nature of most major acquisitions. However, let there be no doubt in anyone's mind, that as much respect as Mulally deserves for what he's done at Ford, Elop is the better fit. 

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  • Report this Comment On October 04, 2013, at 1:24 AM, rusticguy wrote:

    If Microsoft only has 10 year "non exclusive" licensing deal for the patents, how can they troll on something that they don't even own even after the deal is through?

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