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Nadella likely new Microsoft CEO

HEAVY HITTER SOUGHT:A source said that although cloud computing head Satya Nadella has little experience managing investors, he would likely focus on innovation

Reuters, NEW YORK and SEATTLE

Satya Nadella, senior vice president of research and development for the online services division of Microsoft Corp, speaks during a Microsoft Search Summit event in San Francisco, California, on Dec. 15, 2010.

Photo: Bloomberg

Microsoft Corp is likely to appoint its cloud-computing head, Satya Nadella, as its next chief executive, a source familiar with the matter said on Thursday, as the board concludes a five-month search for a tech-savvy heavy hitter to lead the world’s largest software company.

As part of the move, co-founder Bill Gates may step aside as chairman and be replaced by lead independent director John Thompson, said the source, speaking on condition of anonymity because the process is private. Gates would remain a director, the source added.

Bloomberg first reported the news on Thursday.

Rising star Nadella, a native of Hyderabad, India — where Microsoft has its largest non-US research center — was promoted to run the company’s fast-expanding cloud, or Internet-based, computing initiatives in July last year as part of current CEO Steve Ballmer’s radical reorganization of the company.

The appointment of the 22-year Microsoft veteran would make him the most powerful Indian-born tech executive in the world and put him alongside PepsiCo Inc chairperson and chief executive officer Indra Nooyi as the leader of a well-known, large-cap US corporation.

Born in 1967 and educated in India and the US, Nadella’s tech career started at Internet software pioneer Sun Microsystems. He joined Microsoft in 1992 and quickly climbed the corporate ladder with leading roles in the Office and Bing search-engine teams.

He was promoted to run the company’s server and tools unit in 2011. That unit now forms the backbone of Microsoft’s cloud-computing platform, which Nadella runs under his official title of executive vice president, cloud and enterprise.

“He’s a solid choice,” offering continuity of strategy and proven execution, said Sid Parakh, an analyst at fund firm McAdams Wright Ragen.

Some investors had campaigned for an external CEO who might be more likely to shake up the company and reward shareholders with greater dividends and share buybacks, but Parakh said that did not mean Nadella would be unpopular with Wall Street.

“Any new CEO is going to have to have the shareholders’ say in mind. But it’s not certain that will translate into actions,” Parakh said.

If Nadella is named CEO, it is likely Thompson will help out on the crucial task of managing Microsoft’s relations with its powerful Wall Street investors, the source said.

Nadella has little experience of that aspect of the job, and Ballmer and Gates did not prioritize it. Gates would likely focus on technical innovation in any new role, the source said.

There have been calls for months for Gates to step down from investors who believe Microsoft’s co-founder is a block to radical change and investor-friendly moves.

Ballmer, who plans to retire as soon as a new CEO is named, was re-elected to the board in November, but it is not clear how long he will remain there after retirement, the source said.

Several people briefed on the CEO search process had previously told Reuters that Microsoft was down to a handful of candidates, including Nadella and Tony Bates, executive vice president of business development, plus at least one external candidate.

The board still has not met to finalize Nadella’s offer and nothing has been signed, the source said. Microsoft declined to comment.

Microsoft shares rose 0.8 percent to US$37.15 after hours, after gaining slightly in regular NASDAQ trading.

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