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The competition for Microsoft’s new head

15 November 2013 / 23:11:58  GRReporter
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                                                                    Alan Mulally

The external candidates include Alan Mulally, CEO of Ford, Mark Hurd, president of Oracle, and Stephen Elop, who has left Nokia and, after the sale of the Finnish mobile business, will join the software concern at the beginning of next year.

The list of candidates reflects the struggle of the board in connection with the following issue: Should the future number one be a technology expert, able to give a boost to Microsoft in the development of innovative products, or should he rather be a professional who can control a large and widely spread company? This fundamental decision will determine the immediate future of the software group and its direction, namely whether the focus will be on new technologies, which will enable the company to compete with Google and Apple, or on pushing the concern to work as efficiently as possible.

The board of Microsoft is facing the historically significant task of finding just the third CEO in its 38-year history and, perhaps, the first one who is not connected with the company's founder.

Other outsiders who are being considered for the top job are Charles Phillips, a former president of Oracle, who is now running the business software company Infor, and Paul Maritz, a former manager at Microsoft, who is currently the head of the specialized business software company Pivotal Labs.

Among the present managers, the commission has also interviewed Tony Bates and Satya Nadel as to whether they would undertake to replace Ballmer. Not all the people are serious candidates for the position however. Mark Hurd, for example, has stated that he wants to remain in Oracle.

The managers at Microsoft, who have been charged with the search for a new head, are aware that the best option is for Ballmer’s successor to be presented as soon as possible. The board hopes that it will be able to take the decision within four to six months, or by the end of this year or early next year. Ballmer announced his withdrawal in August. He will withdraw within a year, or, when the commission finds his successor.

Ford’s Alan Mulally stands out as one of the most interesting candidates. He is 68 years old and has no experience in information technologies. The former manager of Boeing, who owns a huge house in the Seattle area, has close ties with Ballmer personally and he had consulted him many times, most recently in connection with the radical reorganization of the concern in July.

Ballmer himself strongly backs Mulally as stated by people familiar with the search process. However, it is not clear how much Ballmer can influence the nine-member board.

Meanwhile, John Thompson, head of the selection commission of a new CEO, and others of its members have met with leading stakeholders to find out their views on the future head. A number of major shareholders are concerned about the development of the company as its stock price fell about 40% during the 14-year management of Ballmer. In August, Microsoft had indicated its willingness to take on board, from the beginning of next year, a representative of the reactionary shareholder ValueAct Capital Management.

The signals, on the part of the major shareholders, show that they would support the choice of a highly experienced outsider, like Mulally. The reason, according to those familiar with the developments, is the hope that this type of manager will "thin out" the company, divert resources from less profitable areas and increase the payouts to shareholders, in the form of share buyback or dividends.

The case of "Bill Gates"

Three of the top 20 investors in Microsoft are lobbying for the board to force Bill Gates to leave his post as chairman of the software company as stated by sources familiar with the case on condition of anonymity. There is no indication that the board of Microsoft will satisfy the desires of the three investors who jointly hold more than 5 % of the shares of the company whereas Fates holds 4.5% in it and is its largest individual shareholder.

Even when the news came out that Ballmer withdrew, there were opinions that Bill Gates should return as the head of the company. Gates himself has repeatedly stated that his withdrawal from the active management is final, although he is still closely associated with Microsoft. While Ballmer was managing the company, Gates had repeatedly stood behind him and supported him. After each crisis, when there were inclinations that he would return, the founder of the company gave interviews and publicly supported his successor.

Why are the investors against Bill Gates at present? The first reason lies in what I have mentioned previously, namely that we can assume that, more or less, Gates was dictating the former course followed by the company, even though he was staying out of the limelight. Secondly, the shareholders seek someone who has a new and different perspective on the development of the company so that it can begin to pursue a policy consistent with the new conditions.

Last but not least, Bill Gates is focused on its foundation and its charitable activities. On top of that, in one of his last interviews, he said that "technology will not save the world".

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