At least three of the top 20 investors in Microsoft Corp want a
turnaround expert to succeed Steve Ballmer as chief executive and have
urged the technology giant's board to consider Ford Motor Co. CEO Alan
Mulally and Computer Sciences Corp CEO Mike Lawrie for the job, several
sources familiar with the matter said.
The special committee of the
board, which is conducting the CEO search, and its advisers have been
meeting with shareholders after Ballmer's surprise decision late last
month to retire within a year, the sources said. It could name a CEO as
soon as the end of this year, the sources said.
(Also see: Microsoft CEO Steve Ballmer to retire within 12 months)
In one such
meeting, Microsoft said it started with a list of about 40 people,
including internal and external candidates, and has been narrowing it
down, one of the sources said.
It wasn't clear whether the
Microsoft board had reached out to any of the potential candidates
suggested by investors or whether it was even considering them. The
names of other candidates in the mix could not be learned.
declined comment on Monday. Lawrie and Mulally could not be reached for
comment. But last week, Mulally told Reuters that he was "absolutely
focused on serving our Ford."
The sources requested their identity as well as those of the investors be kept anonymous because the discussions were private.
search for a new chief executive of the world's largest software maker
is one of the most closely watched developments in the technology sector
(Also see: From Nokia chief to Bill Gates, guessing game begins on new Microsoft CEO)
Microsoft remains highly profitable, but it has
struggled to gain traction in the mobile device business against rivals
such as Apple Inc and Google Inc.
In July, the company unveiled a
deep reorganization to transform into a "devices and services" leader,
but has so far failed to convince investors that its strategy will work.
In a sign that shareholders had already lost confidence in Ballmer,
Microsoft's shares rose 7 percent after news of his planned retirement.
week, Microsoft said it would buy Nokia's phone business and license
its patents for 5.44 billion euros. Shares of the software company fell
as much as 6 percent as investors protested the acquisition of an
underperforming and marginalized unit that made a $3 billion operating
loss in 2012.
The move also brings Stephen Elop, who ran
Microsoft's business software division before jumping ship in 2010, back
to the company, positioned as another candidate to succeed Ballmer.
Chairman and co-founder Bill Gates, who is still the company's largest
shareholder with a 4.8 percent stake and is on the four-member special
committee, will likely have a veto on the new CEO choice.
who has focused his day-to-day activities on philanthropy for the last
five years, has not given any indication of what kind of CEO he favors.
are attracted to Mulally and Lawrie because both have histories of
successfully turning around companies, although the Ford CEO is more
widely known thanks to his dramatic reversal of the No. 2 U.S.
automaker, the sources said.
Under a succession plan at Ford
outlined last November, Mulally, 68, is expected to stay on as CEO until
at least the end of 2014. But people with knowledge of the matter said
the executive may step down sooner than planned if he finds an appealing
"There is no change from what we announced in November:
Alan Mulally plans to continue to serve as Ford's president and CEO
through at least 2014," Ford spokesman Jay Cooney said.
A role as
the head of Microsoft would allow him to follow up his seven-year tenure
as Ford's CEO with another high-profile job. It would also bring him
back to Seattle, where he lived during his nearly four decades at Boeing
Co and still has a home.
The other candidate on investors' radar
is Lawrie, a long-time IT executive who engineered a complex fix at
UK-based Misys Plc, a financial software company, before joining
Computer Sciences in 2012.
Computer Sciences, which is in the midst of a multiyear turnaround plan under Lawrie, declined to comment.
also spent nearly three decades at IBM, where he worked alongside John
Thompson, Microsoft's lead independent director who is heading the
special committee, the sources said.
In 2005, Lawrie worked for
about a year as a general partner of activist investor ValueAct Capital,
a Microsoft shareholder that had pressed for Ballmer's ouster and has
been offered a seat on the company's board.
though Ballmer was more a salesman than a technology specialist, a
choice of Mulally, who comes from outside the technology sector, would
be a radical departure for the industry.
The major precedent for
such a move was IBM's successful hiring of Louis Gerstner, a manager
from the financial industry who turned around the struggling computer
company between 1993 and 2002. John Sculley, who went from PepsiCo to
lead Apple from 1983 to 1993, was not regarded as being very successful.
its problems, Microsoft is not yet in such a dire predicament as IBM
was in the early 1990s. Microsoft reported a profit of $22 billion last
year, despite falling sales of PCs, which are still the key to its main
Its online and mobile computing efforts do not make
money. Its Bing search engine and other online ventures have lost almost
$3 billion in the last two years alone, and last quarter the company
took a $900 million write-down on the value of unsold Surface tablets.
billions of dollars of investment, Windows phones still have less than a
4 percent global market share, according to the latest figures from
research firm IDC.
© Thomson Reuters 2013