Microsoft Needs A New CEO -- Now.

| About: Microsoft Corporation (MSFT)

A Rocky Road

Four months have passed since Microsoft's (NASDAQ:MSFT) Chief Executive Steve Ballmer announced his plans to retire. While the company's plan was to hire someone by December of last year, the deadline has now been extended to summer 2014.

One reason Microsoft is experiencing difficulty stems from boardroom dynamics. The new CEO will have to work with Microsoft's founder Bill Gates, Steve Ballmer himself-who was pressured to step down, because the board considered his strategy for growth too slow-and activist investors, like G. Mason Morfit, the President of ValueAct, who are also pushing Microsoft to progress more rapidly.

In addition to working with a formidable pair of Gates and Ballmer--who hold eight percent of Microsoft's stock, and who could curtail decision-making freedom--the new CEO is taking on a business, which has made limited progress in the growing markets of smartphones and tablets.

Possible Candidates

Internal candidates, such as Tony Bates, the company's Executive Vice President, or Kevin Turner, the Chief Operating Officer, no longer appear to be in the running. Meanwhile, many external candidates-experienced CEOs running other companies-have declined the position.

One strong candidate was Alan Mulally, the CEO of Ford; however, Mulally recently declined, stating he was concerned he would have little freedom to organize the company. In response, Microsoft decision-makers said that they thought he might have been too old for the position (at age 68) and that he lacked the technology experience, necessary for strategic breakthroughs. See our prior article here on Mulally.

Hans Vestberg

Despite Microsoft's rocky road thus far, it may have found a suitable candidate in Ericsson (NASDAQ:ERIC) AB, Hans Vestberg. Vestberg served as the Chief Financial Officer of Ericsson from 2007 to 2009, before taking over as Chief Executive in January, 2010. Vestberg first joined Ericsson in 1988 and held managerial positions for the company in several countries, including China, Brazil, and Mexico.

After becoming CEO, Vestberg made bold decisions, which put the company, back on track. By discontinuing a joint venture with Sony over the production of a handset device, and investing in providing profitable services, like managing networks on behalf of telephone companies, Vestberg saw Ericsson shares rise by 19 percent and revenues rise from $32 billion in 2009 to $34 billion in 2013. In September 2013, Vestberg acquired Microsoft's Mediaroom unit, which transforms the software used by telephone companies, so that they can deliver television services through broadband networks.

In addition to his proven ability to work through difficult situations (a skill that could serve Microsoft well in its bid to catch up with the new wave of mobile devices), Vestberg may also help raise Microsoft's public profile. At Ericcson, Vestberg served as the keynote speaker at the 2012 Consumer Electronics Show, bringing his company into the limelight.

No Decisions Yet

Although Vestberg appears to be a good fit, John W. Thompson, Microsoft's Director charged with the CEO search, is not revealing the company's cards yet; on the other hand, Vestberg is also refusing comment.

Despite the silence, Vestberg has what Microsoft is looking for: youth enough to hop on the fast-moving corporate tech train-not to mention his specific tech credentials, having participated in every aspect of Ericsson's R&D-the ability to create fundamental shifts to speed up the company's growth and innovation, and enough visibility to win the public over with a strong leadership presence.

Investors Should Take Action

Microsoft has come under increasing scrutiny for its lack of expansion and creativity, compared with similarly high-profile tech companies, like Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG). A recent Wired article described Microsoft inventions "gathering dust in a lab" instead of "changing the world" (Metz, 17 January 2014). While the company's fundamentals are still strong, MSFT missed its projected revenues for the last five quarters. It appears now is the time for bold, united leadership to bring MSFT into the New Year.

Until Microsoft gets its act together and finds a suitable CEO, we recommend growth investors take profits in this stodgy technology company and invest the proceeds in Apple and Google which have more growth potential in 2014.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.