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Was Microsoft smart to play it safe with CEO pick?
Question of the Day
SAN FRANCISCO (AP) - After compiling a list of more than 100 CEO candidates, Microsoft settled on Satya Nadella a home-grown leader who joined the software maker in the early 1990s. That’s back when Google’s founders were teenagers and Facebook CEO Mark Zuckerberg was in elementary school.
Tuesday’s hiring of Nadella as Microsoft’s CEO after a five-month search is a safe move that’s likely to be greeted with sighs of relief around the company’s Redmond, Wash. headquarters, industry analysts say. But the methodical, almost predictable decision is likely to reinforce perceptions that Microsoft Corp. is a plodding company reluctant to take risks as it competes against younger rivals who relish going out on a limb.
While Google founder and CEO Larry Page boasts about his company taking “moon shots” and Zuckerberg promises to “move fast and break things,” Microsoft has fallen behind the technological curve after underestimating the importance of Internet search more than a decade ago and reacting too slowly to the rise of mobile devices during the past seven years. Meanwhile, the sales of personal computers running on Microsoft’s Windows software are shrinking.
Microsoft’s malaise may have narrowed the field of up-and-coming visionaries interested in running a company founded in 1975.
“Going to work at Microsoft could make it look like you are going back to the dark ages,” says Richard Metheny, a management coach for the executive search firm Witt/Kieffer in Chicago. “It’s a well-entrenched business that has had trouble lately figuring out how to play in this new world.”
Despite its challenges, Microsoft remains a moneymaking machine that sits atop an $84 billion cash pile. That alone should have been enough to tempt technological sharpshooters to take a shot at turning around the company, says Dennis Carrey, vice chairman of executive recruiting firm Korn Ferry and co-author of the book, “Boards That Lead.”
Microsoft “is like a car that still has a full tank of gas, but it’s just an old model,” Carrey says. “There are a lot of great tech executives who yearn for that kind of challenge, especially with a bucket of cash to make acquisitions and do some really fun, cool stuff.”
A Microsoft resurgence is entirely possible. IBM famously bounced back during the 1990s after hiring an outsider, former packaged food and financial services executive Louis Gerstner, to impose the most wrenching changes in that company’s history.
Unsurprisingly, Microsoft described Nadella as the best person to intensify the company’s focus on blending software and gadgets with cloud computing - a term broadly used to describe the concept of delivering applications and other services over the Internet.
Nadella, 46, wins praise from analysts and colleagues for his technical expertise, affability and deep knowledge of Microsoft’s culture and disparate divisions. He has spent the last 22 years at the company, working in jobs that gave him insight into cloud computing, data centers, Internet search and video game consoles.
“As Microsoft continues down the right lane of the highway at 55 mph with its new CEO in hand, the fear among many investors is that other tech vendors from social, enterprise, mobile, and the tablet segments continue to easily speed by the company in the left lane of innovation and growth,” FBR analyst Daniel Ives wrote in a Tuesday research note.
Given the stock’s poor performance and the challenges facing the company, it probably would have made more sense for Microsoft’s board to hire an outsider as CEO, says long-time technology analyst Patrick Moorhead.
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