Microsoft to name new CEO in early 2014

While outsiders had expected a 2013 decision, a month or two more won't make a difference as long as the board gets it right, argues analyst

Microsoft won't select and announce a new CEO this year, the director who leads the search said today.

"I expect we'll complete our work in the early part of 2014," said John Thompson, the head of the four-man committee conducting the search, in a post to the company's blog Tuesday.

John Thompson
John Thompson, the director leading Microsoft's search for Steve Ballmer's replacement, said Tuesday that a new chief executive would be named early next year. (Image: Microsoft.)

The committee includes Thompson, until 2009 the CEO of Symantec; Chuck Noski, formerly of Bank of America; Seagate CEO Steve Luczo; and co-founder and chairman Bill Gates. Current CEO Steve Ballmer is also involved in the search.

Thompson also touted the breadth of the CEO search, saying the board had "cast a wide net across a number of different industries and skill sets," then ticked off several statistics. "We identified over 100 possible candidates, talked with several dozen, and then focused our energy intensely on a group of about 20 individuals."

The pool has shrunk since then, Thompson said, but he did not name a number. More than a month ago, Reuters reported that Microsoft had culled the list to a minimum of eight.

Microsoft was expected by many to move quickly to name a new CEO after the abrupt announcement in August by Ballmer that he would retire. Ballmer has denied that he was ousted, but comments Thompson made to the Wall Street Journal earlier this year showed that pressure had been exerted on Ballmer to either step up his game or get out of the way.

An early 2014 decision, if that is what happens, is not much different than one made in the waning weeks of 2013, said Ross Rubin, an independent analyst at Reticle Research. "A month or two won't make a critical difference," said Rubin. "It would be far worse to make a decision the board would later regret."

Microsoft never laid out a timetable for choosing Ballmer's replacement other than to note he would retire within 12 months of his late-August announcement, and do so after a new chief executive had been picked.

Thompson's status update was unusual for Microsoft, which has been close-lipped about the CEO search. Last month, for instance, Gates talked about the process in the most general terms, but refused to discuss a timeline.

Rubin spelled out several reasons why the decision is taking longer than outsiders anticipated.

"It's been clear that they're looking at both internal and external candidates, and that may complicate things," Rubin said. Before naming an internal candidate -- Satya Nadella, who heads the company's Cloud and Enterprise group, has been cited by speculators most often -- the board would want to plan for possible fall-out from other executives who were passed over.

"They would want to plan for what happens to the other people who were being considered, including if they decided to then leave," said Rubin.

Jumping ship may be a tough decision for some execs: In late September, Microsoft revealed it had handed out millions in stock grants to eight men and women to ensure "continuity of key leaders during the transition to a new chief executive officer." At the time, the grants were worth between $1.6 million and $19.9 million each, with COO Kevin Turner scoring the top award.

However, several of the widely-cited internal prospects, including Nadella and Tony Bates, the CEO of Skype before it was acquired by Microsoft and now the head of the Business Development and Evangelism group, were not among the eight.

"And if [the leading candidate] is external, say Alan Mulally [CEO of Ford Motor], there are things that person may have to do at their current company before they could accept," said Rubin.

Analysts and pundits who bet that Microsoft would act this year, not next, based their opinions in part on Ballmer's mistakes -- being unable to successfully move Microsoft from the desktop to mobile was at the top of their lists -- and a need for quick decisions to get the company executing the strategy Ballmer and the board have laid out to transition to a devices and services company.

While a wait of a month or more won't be disastrous, Rubin noted even after the selection is announced, a period of uncertainty will prevail. It's typical for any new chief executive to take between one to three months to assess the situation and present their ideas to the board, said Rubin. Only then would the company and its employees get new marching orders.

"If a month or two is going to make a difference, it's certainly worth spending the time," Rubin concluded. "And if they're closing on the right candidate, there may be some road blocks that need to be cleared first."

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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