Microsoft CEO Search: Mulally Seems Out Per Nomura

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Microsoft Corporation (NASDAQ:MSFT) board member John Thompson wrote in a blog, yesterday that the BoD had identified “…over 100 possible candidates, talked with several dozen, and then focused our energy intensely on a group of about 20 individuals, all extremely impressive in their own right…we’re moving ahead well, and I expect we’ll complete our work in the early part of 2014.”

Just third Microsoft CEO in 38 years

That sounds like a monumental project, but may be justified considering Microsoft Corporation (NASDAQ:MSFT) is looking for only its third CEO in 38 years.

Since August 23, when the company announced Steve Ballmer’s retirement, speculation about his replacement has thrown up names such as Ford CEO Alan Mulally, Bill Gates in a re-run role, current COO Kevin Turner in the interim, followed by former Nokia CEO Stephen Elop, Paul Maritz of EMC and Qualcomm COO Steve Mollenkopf.

With Qualcomm moving quickly to stave off Mollenkopf’s likely defection, and Maritz confirming to Nomura last week that he was not interested, two able candidates are out of the field. It certainly looks like the list is thinning, and not because Microsoft Corporation (NASDAQ:MSFT) is short-listing.

So what now?

“We believe the board has considered a good general manager (such as Mr. Mulally) who might be able to complement his skills with technology strengths of others, either already within the company or outside,” says Nomura analyst Rick Sherlund, an old hand on all things Microsoft, in a research note released yesterday.

Sherlund thinks the Microsoft Corporation (NASDAQ:MSFT) board may have failed to find a single candidate possessing all the following crucial attributes for the CEO position:

  • Ability to run a large company such as MSFT
  • Experience of engineering a turnaround, and
  • A technical background

On the recurring speculation regarding Ford’s Mulally, Sherlund estimates that he may not be in the running if credence is to be placed on press reports that the Microsoft Corporation (NASDAQ:MSFT) board is looking at a whole new list of “dark horse” candidates. In addition, Ford itself may ask Mulally to clarify his position, one-way or the other.

Sherlund also speculates that it is unlikely Mulally is still in the running, “given our reading between the lines of Mr. Thompson’s choice of words, appearing to us to imply that some on the board may be digging in their heels on a candidate with more of a technical background.”

That would be negative for the stock, according to Nomura, who have a Buy rating on the stock with a price target of $45.00.

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