Microsoft expects CEO appointment in early 2014

ReutersDecember 18, 2013 

The board member leading Microsoft Corp’s search for a new chief executive said on Tuesday he expects an appointment to be made early next year, the first time the board has been so specific on timing.

The announcement suggests the world’s biggest software company is nearing the end of its search for a new leader, which began in August when Steve Ballmer announced his plan to retire within 12 months.

Microsoft pledged to pick a successor within that timeframe, although most investors had expected the process to be finished by December or January.

“We’re moving ahead well, and I expect we’ll complete our work in the early part of 2014,” Microsoft lead independent director John Thompson said in a blog post on the company’s website.

Thompson is leading the four-man committee to find a new CEO, which includes co-founder and chairman Bill Gates.

Sources familiar with the search process have told Reuters that the committee is down to a “handful” of candidates, including Ford Motor Co. CEO Alan Mulally, at least one external candidate from the technology industry and one or two internal candidates.

“We identified over 100 possible candidates, talked with several dozen and then focused our energy intensely on a group of about 20 individuals,” said Thompson in the blog. “As this group has narrowed, we’ve done deeper research and investigation, including with the full board.”

Intense speculation has surrounded Ford’s Mulally as a leading candidate. He has not denied interest in the job, but has repeatedly said he enjoys working at Ford, where he is slated to remain through 2014.

Last week it was reported that Qualcomm executive Steve Mollenkopf was a leading candidate for the job, but the chip maker forestalled that by making him CEO.

In choosing between Mulally, a candidate from the technology industry, and its own ranks of executives, Microsoft must make a decision on how much it desires large-scale management experience or deep technical knowledge in its CEO.

On Tuesday, Thompson’s blog emphasized the tech-heavy requirements of the position: “This is a complex role to fill, involving a complex business model and the ability to lead a highly technical organization and work with top technical talent.”

Analysts weigh in on search, Whats next for Microsoft

MARK MOERDLER, ANALYST, BERNSTEIN

“This is one of those name games. There’s no way externally to really know what’s going on or who may really be on the list.

“I don’t think this is a significant sword hanging over their head. There are those who think the whole upside in this stock comes out of the CEO story, and some massive reorganization that might arise out of that.

“The upside to this story that is long-term much more important, is the fact the company has been preparing for and making a move within the enterprise business to cloud and subscription, which will drive significant revenue and EPS upside.”

KIRK MATERNE, ANALYST, EVERCORE PARTNERS

“Most investors were already expecting them to make the announcement in early 2014. Early ’14 was always the expectation. And since there weren’t any real specifics around the candidates they are talking to, I am not sure there was a whole lot of new information in the blog.

“Perhaps it was just before the end of the year, to just let people know that they are still on track and things are progressing.

“It’s a complex job. I don’t think it’s surprising that it is taking some time to try to find the right person. Finding the right person for that, who also has the ability to work across both consumer and enterprise markets, that’s a complex position. I don’t think the fact that the process is taking some time should be a huge surprise to anyone.”

ROGER KAY, ANALYST, ENDPOINT TECHNOLOGIES

“I find it odd that they bothered to disclose it. It’s as if it’s a material, fair disclosure kind of fact. It’s an expression that they are aware of the impatience out there, and that the market is tapping its foot and looking at its watch.

“On the face of it they’re saying, ‘We have a process and the process will be completed by that time’. It seems like a statement of a real plan and they also have a person, or why would you hamstring yourself when you commit to an arbitrary date.

“Perhaps there’s pressure from the board. It may be down to two or three and all of them have expressed their interest and are ready to commit to the board to make that nod. Otherwise, there’s no reason to limit the scope of your decision by giving a timeframe arbitrarily.

“The board probably is saying, ‘We just need to the finalize and are fiddling around with things. We’re close to an end.’ ”

Reuters

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