By Bill Rigby and Christian Plumb
SEATTLE/NEW YORK Jan 8 Speculation over
Microsoft Corp's succession plans refocused on internal
choices on Wednesday, a day after the leading outside candidate,
Ford Motor Co CEO Alan Mulally, took himself off the list
of potential CEOs at the world's largest software maker.
A source close to the company said no appointment was likely
until the last week of January or in February. The source asked
not be identified because they were not authorized to speak
publicly about the process to select a successor to long-time
CEO Steve Ballmer, who in August announced his plan to retire.
In late January, many Microsoft executives will be focused
on the company's earnings, which are scheduled to be released on
Jan. 23. Also, chairman Bill Gates, a key member of the search
committee, will be at the World Economic Forum in Davos.
For months, Microsoft watchers had pegged Mulally as the
odds-on bet to succeed Ballmer as chief executive at the
dominant producer of software for desktops and laptops, which
has faltered in making the transition to the fast-growing mobile
phone and tablet markets.
But Mulally formally pulled out of the running on Tuesday,
telling the Associated Press he would remain at Ford through
It was unclear whether Mulally's withdrawal from
consideration was his decision or Microsoft's. While the
company's intentions remained a guessing game, internal
candidates now seemed the obvious ones, especially in light of
comments by Microsoft about the importance of tech know-how for
the top job.
Mulally appeared to be the front runner in the latter part
of last year and seemed to be interested in the job, but
Microsoft never made him an offer, suggesting that the
prevailing mood on the company's board was that he was not right
for the job, two sources familiar with the process said.
The sources have also told Reuters that Microsoft is down to
a "handful" of candidates, including insiders Satya Nadella,
executive vice president of the Cloud & Enterprise group and
Tony Bates, executive vice president of Business Development and
Former Nokia CEO Stephen Elop, a Microsoft veteran before
moving to Nokia, whose mobile phone business Microsoft bought
last year, has also been cited as a top candidate, as have one
or more outsiders from the tech industry.
As a former Microsoft executive who will soon rejoin the
company when the takeover is complete, Elop was mentioned as now
"front and center" of the CEO race in a research note from FBR
analyst Daniel Ives, who cited his "previous Microsoft
experience and demonstrable expertise in the mobile space."
Evercore analyst Kirk Materne saw it differently, naming
Nadella and Bates as the leading internal candidates who "could
potentially institute organizational change at a more rapid
pace given their insider status."
Microsoft shares, which have gained 36 percent over the past
year, were down 1.2 percent, while Ford shares gained about the
'DARK HORSE' IN THE RUNNING?
Nomura's Rick Sherlund labeled Mulally's withdrawal as
"disappointing" in a research note, echoing the sentiment of
some other investors and analysts.
Sherlund said it was unclear who the board would turn to,
saying he viewed Bates and Nadella as capable, but "more likely
to take direction from Microsoft's board rather than redirect
the board and take the company in a different direction as we
If the company does opt to go with an outsider, candidates
could include Facebook Inc Chief Operator Officer Sheryl
Sandberg, VMware Inc CEO Pat Gelsinger and Pivotal CEO
Paul Maritz, Ives said.
Sherlund agreed that Microsoft could still look at a "dark
horse" outsider but noted that some tech sector candidates,
including Maritz, may have already declined to take the job.
In a blog post on the company's website in December,
Microsoft lead independent director John Thompson emphasized the
need for a CEO with good tech bona fides and "an ability to lead
a highly technical organization and work with top technical
Thompson, who leads the four-member CEO search committee,
said at the time he expected the panel to reach a decision "in
the early part of 2014."