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Gates Should Return to Lead Microsoft, Schwab Says

November 20, 2013

Gates Should Serve as Microsoft CEO for a Year, Schwab Says

Microsoft Corp. Chairman Bill Gates, left, and Chief Executive Officer Steve Ballmer during an event promoting the launch of the company's Windows Vista and 2007 Office System in New York, in this Jan. 29, 2007 file photo. Photographer: Ramin Talaie/Bloomberg

Bill Gates should serve as Microsoft Corp. (MSFT:US)’s chief executive officer for a year as the software company he co-founded seeks a replacement for Steve Ballmer, according to Charles Schwab.

The world’s largest software maker is seeking a new leader after Ballmer said in August that he would retire within a year. The management change is happening as Microsoft adopts a new corporate structure focused on devices and services.

Gates should return to revamp Microsoft’s culture, Schwab said. Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc. and confidant of the software maker’s chairman, has ruled out the possibility of a return, and Gates isn’t being considered for the role, people with knowledge of the matter have said.

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“I think it would behoove Gates to go back for at least a year,” Schwab, the chairman of Charles Schwab Corp. (SCHW:US), said today at The Year Ahead: 2014 conference hosted by Bloomberg LP in Chicago. “He’s the only guy who can really reshape the cultural aspects. Otherwise the organization will spit anybody out, anybody coming in.”

Gates, who was Microsoft’s CEO until Ballmer took over in 2000, said at a shareholder meeting yesterday that he and other directors have met with “a lot of CEO candidates.” The board is aiming to narrow the list of CEO candidates to three to five, a person with knowledge of the matter said last week.

Peter Wootton, a spokesman for Microsoft, didn’t respond to a request for comment.

CEO Shortlist

External choices to replace Ballmer include Ford Motor Co. CEO Alan Mulally and former Nokia CEO Stephen Elop, among others, people with knowledge of the search have said. Because the board perceives the new CEO will have to lead change at Microsoft, the final choice is more likely to be an outsider, one person with knowledge of the search said last week.

Directors are also considering three internal candidates: business development and evangelism chief Tony Bates and Satya Nadella, who oversees the company’s cloud and enterprise business, as well as Chief Operating Officer Kevin Turner, people have said.

The board is aiming to have a final choice as soon as next month, three people said. Gates said yesterday he wouldn’t give a timeline for the decision.

Schwab returned in 2004 as CEO at the company he founded after he was asked back by the board. While he initially said he’d return for one year, Schwab stayed in the role until 2008.

Going Back

“The only way we were going to resurrect the company was for me to come back and shatter some of the things that we had in the company that were cultural issues” that needed to be changed and modernized, Schwab said. “When you build up a culture, there’s really only one person who can knock it down.”

Buffett said last month there was zero chance Gates would return to Microsoft. Buffett, who plays bridge with the fellow billionaire and has committed a majority of his wealth to the foundation run by Gates and his wife, Melinda, said the software maker’s chairman “has got more than a full-time job at the Gates Foundation, and obviously cares about Microsoft, but he’s not going back.”

Michael Dell returned as CEO of his namesake company in January 2007, amid slowing profit growth and market share loss in personal computers. Dell had turned the reins over to Kevin Rollins for three years before ousting him and retaking the CEO job. Dell Inc. went private last month in a $24.9 billion leveraged buyout by Michael Dell and partner Silver Lake Management LLC.

To contact the reporters on this story: Sam Mamudi in New York at smamudi@bloomberg.net; Diane Brady in New York at dbrady11@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net; Nick Baker at nbaker7@bloomberg.net


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Companies Mentioned

  • MSFT
    (Microsoft Corp)
    • $47.52 USD
    • 0.84
    • 1.77%
  • SCHW
    (Charles Schwab Corp/The)
    • $30.37 USD
    • -0.41
    • -1.35%
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