Here's the Real Problem With Microsoft's CEO Search

Mulally won't join Microsoft, but there's more at stake here.

Jan 8, 2014 at 10:15AM

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Despite a higher-than-expected number of jobs added by the private sector in December, stocks opened roughly unchanged on Wednesday, with the S&P 500 and the narrower Dow Jones Industrial Average (DJINDICES:^DJI) down 0.13% and 0.49%, respectively, at 10:15 a.m. EST.

Scratch one highly qualified candidate from the list of potential successors to CEO Steve Ballmer at Microsoft (NASDAQ:MSFT). In an interview with the Associated Press that put an end to months of speculation, Ford (NYSE:F) CEO Alan Mulally said categorically he would not jump from the automaker to the software concern: "I would like to end the Microsoft speculation because I have no other plans to do anything other than serve Ford."

The timing of Mulally's public commitment to Ford isn't random, coming ahead of Monday's start to the press reviews of the North American International Auto Show in Detroit, where the Blue Oval will launch a new version of its F-150 pickup truck, the most successful model in Ford's lineup and a major contributor to company profits. Last month, the rumors of Mulally's possible departure hampered his efforts to promote the 2015 Mustang. Sales of Ford's F-Series pickups rose 18% last year to 763,402, easily topping the second-place Chevrolet Silverado, which had sales of 480,414.

Within the last month, both General Motors and Chrysler resolved significant leadership issues, leaving them free to focus on selling cars.

As an outsider not only to Microsoft, but to the entire software industry, Mulally was perhaps the most interesting name to come up with regard to Redmond's CEO search, particularly given his success at turning around Ford. Microsoft needs someone who can assess the business with a clean slate, someone for whom there are no sacred cows. Mulally was that person and, as a bonus, he already had a relationship with Ballmer.

Which brings us to another issue: Microsoft's search is complicated by the fact that the only two CEOs the company has ever had -- one of them a co-founder -- sit on the board. In fact, Bill Gates is part of the committee that is tasked with selecting the next CEO, although, according to an excellent piece in The Wall Street Journal that looks at why Microsoft hasn't chosen a new chief yet [subscription required], neither Gates nor Ballmer has veto power over a candidate.

Nevertheless, some major investors are reportedly concerned about the extent of Gates' influence on the board. Justifiably so, in my opinion: one of Microsoft's biggest challenges is its inability to move with sufficient alacrity. The current CEO search is turning into another example of that weakness.

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Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on Twitter @longrunreturns. The Motley Fool recommends Ford. The Motley Fool owns shares of Ford and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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