Is This Swede Microsoft's Next CEO?

Microsoft (NASDAQ: MSFT  ) is struggling to find its next CEO. And that's a serious problem. Microsoft stock has largely trailed the Dow Jones Industrial Average (DJINDICES: ^DJI  ) since the CEO search began, and investor returns for this stock tend to follow the search for top talent. Shares of the software giant have jumped and slumped on rumors that a top candidate might be available for the job -- or not.

MSFT Chart

MSFT data by YCharts.

Microsoft looks likely to run with an internal promotion in the end, but a Bloomberg report points to a surprising new name in the mix.

Will Hans Vestberg be Microsoft's next CEO? Source: Ericsson.

According to the usual unnamed sources, allegedly briefed on the CEO search, Microsoft is giving serious consideration to LM Ericsson (NASDAQ: ERIC  ) CEO Hans Vestberg.

Vestberg would certainly be an interesting choice. Rising from the CFO position, one of Vestberg's first actions as CEO of Ericsson was to unload the company's handset interests to Sony-Ericsson joint venture partner Sony (NYSE: SNE  ) . Ericsson's networking equipment sales have been supplemented with a large dose of service contracts, often without any ties to Ericsson hardware at all.

He's a big believer in broadband Internet connectivity, especially of the mobile kind. But given the way he hung up on the Sony collaboration, he doesn't seem too interested in the consumer-facing side of these trends.

Bringing that mind-set to Microsoft would definitely shake things up. Replacing the current slate of big license fees with a new focus on support and service contracts would move Microsoft closer to archrival Red Hat (NYSE: RHT  ) . The Linux vendor often gives its software away for free but supplements that with world-class (and high-priced) support agreements. This antithesis to Microsoft's point of view is now a proven business model, and Red Hat shares have absolutely crushed Microsoft's returns over the last five years.

MSFT Chart

MSFT data by YCharts.

Now, Vestberg would be an interesting and even healthy choice for Microsoft, but that doesn't mean he's a lock for the position. Microsoft's board of directors might not be comfortable with the radically different business vision Vestberg would bring to the table. Lifting a Microsoft insider to the CEO spot would be a much easier choice for Redmond -- whether it's the right idea or not.

I'd be delighted to see Hans Vestberg take the reins at Microsoft, but it would be a shocking choice, to say the least. Add Microsoft to your Foolish watchlist to keep up with the CEO search, but don't expect anything other than an insider promotion to preserve the status quo at the end of the day.

Microsoft crushed the market in the 1990s -- who will do it in this decade?
The one sure way to get wealthy is to invest in a groundbreaking company that goes on to dominate a multibillion-dollar industry. Microsoft used to be this kind of disruptive innovator, but that was a long time ago. Our analysts have done it before and now they think they've done it again with three stock picks that they believe could generate phenomenal returns. They've revealed these picks in a new free report that you can download instantly by clicking here now.


Read/Post Comments (0) | 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.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2799609, ~/Articles/ArticleHandler.aspx, 12/22/2014 12:57:28 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...

Today's Market

updated 2 days ago Sponsored by:
DOW 17,804.80 26.65 0.15%
S&P 500 2,070.65 9.42 0.46%
NASD 4,765.38 16.98 0.36%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/19/2014 4:39 PM
^DJI $17804.80 Up +26.65 +0.15%
DOW JONES INDUSTRI… CAPS Rating: No stars
ERIC $12.16 Down -0.10 -0.82%
Telefonaktiebolage… CAPS Rating: ****
MSFT $47.66 Up +0.14 +0.29%
Microsoft CAPS Rating: ***
RHT $68.04 Up +6.54 +10.63%
Red Hat, Inc. CAPS Rating: ***
SNE $20.58 Down -0.56 -2.65%
Sony Corp (ADR) CAPS Rating: **

Advertisement