At this point, many people are simply arguing for Microsoft (MSFT) to seat someone - anyone - and just get this whole CEO mess behind it. It's been months now since Steve Ballmer announced that he was going to step down and the company has failed to put forth any type of concrete plans.
The closest we've been privy to is reports that surfaced last week that seasoned executive Satya Nadella was likely to move in as the company's next head honcho. The New York Times reported:
The company is close to naming Satya Nadella, the head of its corporate software and cloud computing business, as its next chief executive, according to people briefed on the process. Mr. Nadella's selection has not been completed, but it could be announced as early as next week, said these people, who spoke on the condition of anonymity.
As part of its conversations with Mr. Nadella, the Microsoft board has also discussed possible changes to the role of Bill Gates, the company's co-founder, these people said. One possibility is that Mr. Gates will step down as chairman, keep his board seat and become more involved as a strategic adviser for Mr. Nadella. The board has not made a final decision on Mr. Gates, and he could remain as chairman, one of these people said.
Personally, I like Nadella as a choice for a couple of reasons.
First, the "shake up" that many were calling for from Microsoft with a new CEO might not be exactly what the company needs. As soon as the CEO search started, the talks about spinning off Xbox and major business plan overhauls started with discussions of former Nokia boss Stephen Elop potentially being seated. I'm a firm believer in not spinning off the Xbox business, and I don't see Nadella as someone likely to make a decision of that nature:
If Microsoft can get their foot in your door and into your entertainment system, tablets, PCs and additional supplemental Xbox sales (Microsoft Points, etc) are likely to follow. Additionally, the Xbox gets brand recognition into households and in front of people and is arguably the one Microsoft product that die-hard Apple supporters would buy. I know, because I was one of them.
Microsoft will likely profit from its media capabilities once established inside the home - and that leads me to continue being bullish on Xbox as a division of Microsoft and on Microsoft as an investment.
I even argued that bringing Elop in seemed to make sense due to his ties with Nokia and Microsoft's desire to monetize mobile. But, alas, it's looking like that option is off the table. So, it's looking like Nadella is the "safe choice".
Second, Microsoft is arguably in some of the best shape it's ever been in. Now that Windows 8.1 is out and Microsoft's foray into tablets with the Surface 2 seems to be showing traction, there isn't much of a need for Microsoft to stray from the current path they're on.
The company just reported an excellent quarter, posting EPS that was .10 above estimates. Shareholders like it too, Microsoft stock is up 35.5% in the last twelve months alone, even in the midst of this CEO fiasco. The company remains strong with $60 billion in cash and short-term investments on hand and a strong dividend.
Microsoft is trading near its 52-week highs on this news, with a trailing 12 month P/E of 14 and a dividend that yields 3%. With fresh blood moving into the CEO position and the company's fundamentals better than they've ever been, I'm bullish on Satya Nadella and Microsoft stock.
Best of luck to all investors.