What Losing Mulally to Microsoft Would Mean for Ford

Will Ford's CEO Alan Mulally wind up as the next CEO of Microsoft? We don't have a crystal ball, of course, but considering the recent rumors that Mulally is a front runner for the Microsoft job, let's take a look at how Ford would fare if Mulally stepped down.

Mulally has done a simply incredible job turning around Ford from when he became CEO in 2006. Under his leadership, the company has posted 16 consecutive profitable quarters. While Mulally can't be easily replaced, the foundation he's established could well last long after he has left the company. 

Current chief operating officer Mark Fields is the overwhelming favorite to become Ford's next CEO whenever Mulally leaves. In the video below, Brendan lays out why this is good news for the company, and why it wouldn't materially change the way he views Ford as an investment.

A transcript follows the video. 

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Brendan Byrnes: Hey Fools, I'm Brendan Byrnes, an analyst for Fool.com.

I wanted to take a look at one of the persistent rumors out there in the investing space, which is of course the potential of Ford's CEO Alan Mulally being maybe the favorite for the Microsoft CEO job. Obviously nothing is concrete here. These are all just rumors, but I wanted to take a look at what this would mean for Ford if, maybe, Alan Mulally got the job and decided to take it with Microsoft.

To know this story, you really have to go back to 2006, when Alan Mulally started with Ford. He took out a $23.6 billion loan in September of 2006, which really kept Ford afloat and made them not have to take the bail out that Chrysler and GM took. He even put up the blue oval logo as collateral to take out that loan.

Even after that, though, Ford fought through a lot of tough times. Investors were not all that confident; Ford stock even dropping down to $1.01 per share, a couple years after Mulally was into his helm, in November 2008.

But he committed. He committed to his vision, and he stuck with the ONE Ford Plan. He's going to stay on through at least 2014 if he doesn't take the Microsoft job, but at the same time, Microsoft is rumored to want to fill the vacancy by the end of the year.

What happens if he takes it? Mark Fields would almost certainly step in. Right now, he is the Chief Operating Officer at Ford. He's been with the company since 1989. He rose incredibly quickly in a variety of different roles.

He was the head of Mazda, he was head of Ford's Europe Division, then head of the Americas, and now Chief Operating Officer -- basically Alan Mulally's right-hand man -- and running so much of Ford's operations right now, and all of their employees.

The good news is that he did a really great job with the Americas. He came up with the plan, and a lot of that plan is what Alan Mulally used to help get Americas turned around, and he has experience in the two biggest regions that need optimizing for Ford.

Asia; right now Ford is doing a really good job in China, fighting back after getting a slow start there back in the '90s, but they're doing a great job now. He'll need to keep that momentum going in Asia, in China in particular. He does have experience through heading up Mazda as a Japanese automaker there.

And also Europe; obviously, this has been the Achilles' heel for pretty much all automakers lately. It's still a big problem for automakers. Ford's still going to lose money there this year, it lost $1.75 billion there last year, but again Fields has experience here as he was the head of Ford's Europe Division in the past.

We're starting to see maybe a flicker -- a small, small, small glimmer -- of hope in Europe. Maybe things are starting to turn around, but that's something he's going to have to put a lot of energy in, whether he becomes CEO when Alan Mulally steps down after 2014, or maybe sooner if these rumors prove true and he becomes the CEO of Microsoft.

It all remains to be seen, but Ford investors, keep an eye on this one.


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