by Brad Moon | November 13, 2013 12:18 pm
It’s been almost three months since Microsoft (MSFT) CEO Steve Ballmer announced his pending resignation after Microsoft stock lost 45% of its value during his tenure. When Ballmer took the helm of MSFT in 2000, shares were flirting with $60. But Microsoft stock has been stuck below $30 for much of the past decade, frustrating investors who watched rival Apple (AAPL) soar to record heights.
Yet with all eyes on Redmond and the search for Ballmer’s replacement, Microsoft stock has been on the upswing.
Sure, improved Microsoft earnings in the latest quarter have a lot to do with the renewed confidence in MSFT stock. But when Ballmer announced his retirement in August, Microsoft stock saw one of its biggest spikes in recent memory.
That means Ballmer’s shares in Microsoft stock have appreciated by over $1.7 billion.
Clearly a new CEO is a big deal, but we haven’t heard a lot since the search for Ballmer’s replacement began. At the time, I’d floated Bill Gates, Stephen Elop and Stephen Sinofsky as high-profile possibilities. Over the past few months, though, speculation has focused on two candidates: Elop and current Ford (F) CEO Alan Mulally.
Of the two, Stephen Elop makes the most sense at first glance. The Nokia (NOK) CEO is a former MSFT executive. He led the Office division during his tenure and as Nokia CEO made the decision to partner with Microsoft and move to Windows Phone 8 on its smartphones.
While the stagnation of Microsoft stock has mirrored the poor performance of the PC industry in general, Nokia’s Windows Phone 8-powered Lumia smartphones have become something of a bright spot in Microsoft’s quest for mobile relevance. Lumias are almost single-handedly responsible for shoving BlackBerry (BBRY) out of third spot for global smartphone marketshare. When MSFT announced it was buying Nokia as part of its transition to a “devices and services” company, bringing Elop back into the fold, he immediately became a front-runner for Ballmer’s job.
However, recent reports have an outsider — Ford’s Alan Mulally — now leading the race. The thinking goes that Microsoft stock stands a better chance of recovery under the leadership of someone who has turned big companies around before.
While Nokia hasn’t exactly prospered under Stephen Elop’s leadership, Mulally was CEO of Boeing’s (BA) Commercial Airplanes division before being snagged by Ford. He then led Ford through a recession without need for government bailouts or bankruptcy protection. Under Mulally, the No. 2 auto maker survived the dark times of 2008 and returned to profitability.
Also in Mulally’s favor are the fact that his homeis in Seattle (close to MSFT headquarters), his reputation for fostering a collaborative work environment (a historical weak point for Microsoft) and word that Ford is willing to let him leave before his contract is up.
Ballmer said he’d step down from MSFT within a year; look for Microsoft stock to spike once again when an official decision for his replacement is finally announced.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.
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