Microsoft's CEO Search Loses Its Brightest Star

As far as metaphors go, it's by no means a stretch to say tech giant Microsoft (NASDAQ: MSFT  ) is opening a new chapter, in more ways than one.

In the wake of longtime CEO Steve Ballmer's announcement that he'll be leaving Microsoft after 13 years at the helm of the software giant, Microsoft is in the midst of a high-profile search for a new CEO.

The search for a new leader is arguably the most important storyline to affect Microsoft in some time, as Ballmer's replacement will be charged with crafting a grand new vision for the company. As with many high-profile CEO searches, Microsoft has no shortage of qualified candidates from which to choose.

However, news broke this week that Alan Mulally, CEO of Ford  (NYSE: F  ) , and perhaps the odds-on favorite to land the Microsoft top spot, has removed his name from the list of potential candidates.

Microsoft is worse off for it.

Losing a good one
Mulally's work at Ford has been nothing short of miraculous -- the stuff of business legend.

Many viewed the move as a sign of desperation at the time. However, the combination of improvements to Ford's business and the influx of fresh capital allowed Ford to weather, and ultimately emerge strong from, the absolutely brutal new-vehicle market during the Great Recession, while its two domestic rivals, General Motors and Chrysler, needed government lifelines to stay afloat. Mulally landed at Ford in 2006 after many successful years at aerospace giant Boeing. Almost immediately, he initiated several dramatic steps to fundamentally reshape Ford, including reworking Ford's manufacturing and cost structure, as well as arranging $23.6 billion  in loans to support those efforts.

Source: Ford Motor.

All told, in his time as CEO, Ford's profits have swung from a loss of $12.6 billion in FY 2006 to profit of $5.7 billion over the past 12 months. In the process, Ford's stock has more than doubled, despite the Great Recession, more than doubling the performance of both the Dow Jones Industrial Average and S&P 500.

On to the next one
Unfortunately for Microsoft, Mulally announced this week that he plans to remain at Ford through at least the end of 2014.

With Microsoft hoping to conclude its CEO search by the end of 2013, although more realistically early 2014, Mulally's decision to remain at Ford shifts Ballmer's likely successor to one of several key inside candidates.

Four names sit closest to the top of the list – Satya Nadella, Stephen Elop, Tony Bates, and Kevin Turner. Nadella runs Microsoft's cloud and enterprise business. Elop is returning to Microsoft after helping engineer Nokia's turnaround efforts. Bates leads Microsoft's business development efforts and formerly ran Skype, which Microsoft acquired in 2011. Finally, Turner is Microsoft's chief operating officer, meaning he heads Microsoft's global sales, marketing, and services organizations.

This is a bumper crop of candidates to be sure -- talented and experienced with long track records of success. However, despite their credentials, each candidate suffers from one major blemish: They're insiders.

More of the same
Microsoft's shares have run up to their highest point in 13 years in part because investors finally sense change in the wind at the tech giant. Although its financial performance has been stronger than often admitted during Ballmer's tenure, like it or not, Microsoft suffers from a perception that it's lost its way amid the rapidly evolving technology industry.

And although one of these several internal candidates could be the much-awaited savior ready to lead Microsoft into the next phase of its existence, an internal candidate will likely be interpreted as a let down to investors in the short term. 

This is, of course, a highly fluid storyline. New or old candidates, especially Ford's Mulally, could be brought back into the mix in the coming weeks and months.

Either way, with Microsoft still being one of the most important names in all of technology, this storyline is one of the must-watch items for technology investors today.

One amazing tech stock
This incredible tech stock is growing twice as fast as Google and Facebook, and more than three times as fast as Amazon.com and Apple. Watch our jaw-dropping investor alert video today to find out why The Motley Fool's chief technology officer is putting $117,238 of his own money on the table, and why he's so confident this will be a huge winner in 2013 and beyond. Just click here to watch!


Read/Post Comments (9) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On December 08, 2013, at 6:36 PM, techy46 wrote:

    umm, why is Mulally an industrialist the brightest star. MS needs a technologist with foresight and vision and that isn't Mulally.

  • Report this Comment On December 08, 2013, at 7:03 PM, Drichter wrote:

    Old news at this point, and while he would be a much better candidate than Elop I wouldn't have put him first on the list.

    Microsoft needs young blood that can adapt faster than their current leadership.

  • Report this Comment On December 08, 2013, at 8:12 PM, Azzras wrote:

    Don't know why people liked this guy. He wouldn't have been good for MS. MS needs a technological visionary, not a CEO just looking for shareholders profits.

  • Report this Comment On December 09, 2013, at 12:37 AM, badkat7 wrote:

    There's really no way to salvage Microsoft. It's application suite, including Office, is stale and needs a rethink. I recently tried to write a book using Word 360. I wanted to create chapters as separate documents, I wanted to copy formats around (rather like CSS in web page development), I wanted to embed some code... all of which I could do with Word 2.0! Yet the latest release of Word is further confirmation that Microsoft is going backwards. Ditto Excel which honestly is due for a complete rethink - it isn't in the slightest bit intuitive and reminds me of command line Unix. So with the dullest application suite imaginable and an operating system which STILL cannot perform an automatic system image backup (without 3rd party software) and which STILL uses the awful Registry paradigm.. I'd say that Microsoft is stalled in the fast lane. Sooner than later Microsoft will be gone.

  • Report this Comment On December 09, 2013, at 12:40 AM, badkat7 wrote:

    I should add that Alan Mulally continues to go up in my estimation - both as a highly competent CEO and as a man of integrity. A rare combination in today's corporate world. Turning down Microsoft was a smart move. Very hard to stop a glacier in its tracks.

  • Report this Comment On December 09, 2013, at 1:07 AM, badgerzilla wrote:

    I think the CEO position at Microsoft is a uphill battle. I do not believe that any of the outside candidates will accept the offer. For an internal guy, it is a step up so they all want the job and Microsoft will have no choice but to pick from the inside but no inside guy will stand up to Gates or Ballmer so it will be business as usual at Microsoft.

  • Report this Comment On December 09, 2013, at 3:47 AM, Carling wrote:

    Microsoft have been loosing enterprise businesses to Linux for the last decade, They have also been loosing their biggest business partners, who have joined the Open Source Linux foundation in the last decade, The most recent one being Valve (Stream). I see no future what so ever for Microsoft no matter who they get for their CEO. When one looks at the real reason MS was successful It was not that they are a great technology company. it was that they controlled and forced the sales of windows on every consumer computers over the last three decades. The sooner MS is out of the way the better it will be for all consumers

  • Report this Comment On December 09, 2013, at 4:02 AM, Carling wrote:

    I must add I am not a fan of Apple or Google either. My money is on Free Open Source Linux Companies Like Red Hat

  • Report this Comment On December 09, 2013, at 4:03 AM, tjc206 wrote:

    Did anyone on here see him try to answer the question on CNBC? Let's just wait and see who is actually hired. Selling windows product is not that different from selling fries and coke at Mcdonalds. A lot of assets at Microsoft for an experienced CEO like Mulally to exploit while they innovate and clean up the loose ends, then let a nerd come in for the long haul. And by loose ends, no, I do not mean breaking up the company. Microsoft is making strides that have gone unnoticed, particularly with voice recognition in Windows 8.1 and overall functionality in 8.1. But merging the operating systems is needed in order to clean up some of those loose ends. They need to fix adaptability issues between mobile/rt devices and 8.1. Merging operating systems puts an end to those issues. Throw some new products into the mix like a Surface Phone, Surface 360 and Surface Pro 3 tablets with LTE and we're screaming widespread adoption of the ecosystem.

Add your comment.

DocumentId: 2756861, ~/Articles/ArticleHandler.aspx, 4/16/2014 9:52:32 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement