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Microsoft falls; Street worried Mulally won't be named CEO

Microsoft (MSFT -1.4%) is down 3% over the last two days, as worries grow (thanks to John Thompson's recent comments) Alan Mulally (F -6.7%) won't be named Steve Ballmer's successor.

Nomura's Rick Sherlund, who not long ago predicted Mulally would be Microsoft's next CEO, now wonders if the Bill Gates quote included in Thompson's remarks indicates "the board is rethinking the role and looking more exhaustively at candidates from the technology field."

Moreover, if reports about Ford's board pressing Mulally to give "a definitive answer" regarding his future plans are accurate, Sherlund thinks "he might need to pull his hat out of the ring at some point soon."

Like others on the Street, he's worried a CEO with an IT background won't be as "shareholder-friendly" as Mulally. Sherlund has previously suggested Mulally might cut costs, boost capital returns, and unload Xbox and Bing.

However, FBR's Daniel Ives still thinks Mulally has a shot. He observes today's Ford business update contained no discussion of Mulally's plans, as many expected.

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Comments (9)
  • Transcripts&10-K's
    , contributor
    Comments (1114) | Send Message
    "Like others on the Street, he's worried a CEO with an IT background won't be as "shareholder-friendly" as Mulally."


    Ah yes, because coming from an IT background precludes "shareholder friendly" actions; I wonder if people ever ask for evidence when such arguments are presented...


    Well, let's take a closer look.


    Here's some for the old "capital returns" theory: in the last six years, Ford has generated more than $60 billion in operating cash flows; of that total, they've repurchased $156 million of common stock (0.26% of the total) and paid $763 million in dividends (1.27%). By the way, that repurchase figure is a gross number - on a net basis, is it negative on the order of a few billion dollars due to equity issuance in the 09/10 years.


    None of this proves Mulally is a bad pick for the job; of course if you define shareholder-friendly as dividends and buybacks (as many people do; if this isn't the definition I'd be interested in hearing the alternative approach and metrics), his record at Ford certainly doesn't look like an "A+".


    Writing off Nadella (who has done a fantastic job in charge of S&T at MSFT) and Bates (whose resume is quite impressive to say the least), among others, without any factual reason for doing so, is simply nonsense; the street "knows" that Alan is the man for the job, just like they "knew" RJ's tenure at JCP would be a success (with the stock up 20% on his hiring). I guess we'll have to wait until early 2014 for the "Mulally or Bust" talk to finally die...
    18 Dec 2013, 02:30 PM Reply Like
  • Chrishunet
    , contributor
    Comments (18) | Send Message
    At least the stock is dipping just before end of the year ESPP purchase. I grind my teeth when this happens just after instead of just before.
    18 Dec 2013, 02:49 PM Reply Like
  • ewmpsi
    , contributor
    Comments (1735) | Send Message
    And then it bounces as Ford results don't look that impressive :-)
    18 Dec 2013, 03:59 PM Reply Like
  • anil92691
    , contributor
    Comments (513) | Send Message
    Interesting. With this news, as this article claims, MSFT is down 3% in two days and Ford is down 6.7% just today because Mullay is not joing MSFT.


    So I am concluding that Mullaly is worse for Ford as the news that Mullaly is not leaving Ford resulted in more than twice the drop in Ford's stock compared to MSFT.


    Stock analysts are hilariously entertaining. Who needs Jay Leno and David Letterman!


    Wait till MSFT surprises with the more than expected sales of Surface Tablets and mind you they come with Office Sales too.
    18 Dec 2013, 07:08 PM Reply Like
  • Bingy77
    , contributor
    Comments (211) | Send Message
    You do realize ford was down due to 2014 guidance right?
    18 Dec 2013, 10:14 PM Reply Like
  • anil92691
    , contributor
    Comments (513) | Send Message
    I have reported to some CEOs and Chairman of the Boards that are really dumb, stupid, ego maniacs that talk crap too. And they have some great track record. They kiss the board and tell the shareholders what they want to hear. And because they are dumb, they depend on their VPs who are happy to have the bozo do his part while they keep the company running.


    In short the CEO is not what gets the company ahead, it is the second tier leaders that need to be strong, stable and able to manage the rank and file. I say let Ballmer continue with a different title and appoint a CEO from within. Ballmer can mentor this person. Satya will do a great job.


    A new CEO from outside will cost the business at least 50 million a year over the next 10 years.
    18 Dec 2013, 07:14 PM Reply Like
  • amannsr
    , contributor
    Comments (2) | Send Message
    Why not hire Elon Musk to lead Microsoft. Think what he could create with that capital behind him.
    18 Dec 2013, 09:50 PM Reply Like
  • starcorral
    , contributor
    Comments (972) | Send Message
    Once again for the umpteenth time: Sell your Ford stock as the company's unimpressive history gets worse. Ford sold 600,000+ cars in China in 2012, but only sold 900,000; why didn't they sell more?. Ford is eroding Honda and Toyota sales in China. I mistakenly thought we might see Ford grow nearly a dollar to above $16.00 before February. Having closed above 15.70 on Jan 6, the inevitable fall has begun as Ford closed today at 15.58. I say sell while Ford is standing on their tiptoes in chin high water.


    Please Mr. Mullaly: enjoy your autumn years knowing you have a big fan here in Oklahoma.
    6 Jan 2014, 06:59 PM Reply Like
  • 13limited
    , contributor
    Comments (34) | Send Message
    I hope you all cry when Ford goes back up ??% because Mulally stayed with Ford. You all know this is true you just don't want to admit that you just might be wrong about Ford and all of it's problems. I laugh at you all when I go longer on Ford!! Like you said of the cost to have a new man on the job about what the dollar amount will be to get him or her up to speed on MSFT!~~~~ Well what about Ford bringing in someone who will have to be brought up to sped about Ford? I will also go long on MSFT now~~~~It will cost Ford to retain Mulally the 6% it lost today, but we will all know Wednesday.
    6 Jan 2014, 07:10 PM Reply Like
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