Mulally Bows Out of Microsoft Race to Lead Ford This Year

Jan 08, 2014 4:07 pm ET

(Updates with closing share prices in fifth paragraph.)

Jan. 8 (Bloomberg) -- Alan Mulally, chief executive officer of Ford Motor Co., said he plans to stay with the No. 2 U.S. automaker through 2014 and won’t leave for Microsoft Corp., underscoring the challenge of finding a new CEO to run the world’s largest software maker.

“I would like to end the Microsoft speculation because I have no other plans to do anything other than serve Ford,” Mulally, 68, told the Associated Press in an interview yesterday. Mulally said he will stay with Ford through at least this year. Jay Cooney, a spokesman, confirmed the remarks.

Mulally’s candidacy to lead Microsoft had faded amid concerns about his age and lack of technology experience, people with knowledge of the matter said last month. Other candidates in the mix for the CEO job have included Microsoft’s cloud computing chief Satya Nadella, Executive Vice President Tony Bates and former Nokia Oyj CEO Stephen Elop, people familiar with the search have said.

Steve Mollenkopf, the Qualcomm Inc. No. 2 who will become CEO of the chipmaker in March, was considered by Microsoft’s board before he was promoted, while EBay Inc. CEO John Donahoe and former VMware Inc. CEO Paul Maritz declined to be considered, people familiar with the matter have said.

Ford rose 1 percent to $15.54 at the close in New York, while Microsoft fell 1.8 percent to $35.76. The automaker’s shares advanced 19 percent last year as Microsoft climbed 40 percent and the Standard & Poor’s 500 Index gained 30 percent.

Mulally Questions

“The questions about Alan and Microsoft weren’t going to go away without some type of very specific, definitive answer,” said David Cole, chairman emeritus of the Center for Automotive Research, who speaks with Mulally regularly.

Mulally, Executive Chairman Bill Ford, director Edsel Ford and other company leaders had frequently reiterated a 14-month- old plan that called for Mulally to remain Ford’s CEO through at least this year, without directly responding to questions about Redmond, Washington-based Microsoft. Ford established a successor to Mulally when it promoted Mark Fields, 52, to chief operating officer in December 2012.

Microsoft Chairman Bill Gates emphasized the need to find a CEO with “the ability to lead a highly technical organization and work with top technical talent” during Microsoft’s shareholder meeting in November, lead independent director John Thompson wrote in a Dec. 17 blog post. Longtime CEO Steve Ballmer said in August that he planned to retire from the company within a year.

Collaborative Culture

Mulally’s plan to remain with Ford is “a disappointment” because he was the favored frontrunner to become CEO among Microsoft investors, Daniel Ives, a New York-based analyst at FBR & Co., wrote today in a report. Elop, 50, set to join Microsoft after agreeing to sell Nokia’s handset business to the software maker for $7.2 billion in September, is likely the next top candidate, he wrote.

Mulally’s candidacy for the Microsoft job threatened to overshadow Ford’s new-vehicle introductions such as the F-150 pickup and raised the risk of internal strife among his deputies at the Dearborn, Michigan-based company.

Ford plans to introduce 23 new vehicles in 2014, the busiest year on record for the 110-year-old automaker.

F-Series Truck

It will debut an aluminum F-Series truck, a new design of the best-selling line of vehicles in the U.S., at next week’s Detroit auto show, according to people familiar with the company’s plans. Any problems with the pickup line, which accounted for more than 30 percent of Ford’s U.S. sales last year, would weigh on earnings that the company already projects will decline in 2014.

Mulally is credited for cultivating a more collaborative culture at Ford, which had long been characterized by backbiting. The company borrowed $23.4 billion in 2006 to pay for a Mulally-led restructuring that freed Ford to invest in better cars such as the Fusion sedan, now capable of commanding prices that match or exceed offerings from competitors including Toyota Motor Corp.

Ford is renewing efforts to distinguish its lineup this year in a U.S. market projected to expand by the smallest amount since the industry’s crisis a half-decade ago. The automaker plans to introduce 16 new or redesigned models in North America, triple its number for 2012.

The company has cited the cost of bringing out those vehicles as among the reasons it will earn $7 billion to $8 billion this year after an estimated $8.5 billion pretax profit for 2013.

To demonstrate the toughness of aluminum going into the next F-150, Ford has asked Alcoa Inc. to lend some of the military-grade metal used in Humvees for its display at the Detroit auto show, said a person familiar with the request, who asked not to be identified because the company’s plans are secret.

The F-Series pickup line has been the top-selling truck the last 37 years and has led all vehicles in the U.S. for 32 years. Deliveries climbed 18 percent last year to 763,402.

--With assistance from Dina Bass in Seattle and Beth Mellor in New York. Editors: Jamie Butters, Ben Livesey, Niamh Ring