Microsoft's Nadella: Is the Safe Choice the Right Choice?

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

U.S. stocks look set to cap a volatile week (relative to what investors have grown accustomed to) with another day of losses, with the S&P 500 and the narrower Dow Jones Industrial Average down 0.84% and 1.1%, respectively, at 10:15 a.m. EST. Technology giants Google and are experiencing different fortunes today on the back of their Thursday afternoon earnings releases, respectively up 3.7% and down 7.2%. However, I'd like to focus on another technology stalwart in the headlines this morning, Dow component Microsoft .

Microsoft's Satya Nadella. Source: Microsoft.

It's being reported that Microsoft is close to selecting company insider Satya Nadella to succeed Steve Ballmer as CEO. This would end the uncertainty surrounding the five-month search for Microsoft's next chief, but it may not entirely quell investors' frustration, particularly for those who were looking for a sign of a clean break with the "founders' era."

Ford CEO Alan Mulally, who was thought to be the top external candidate for the job, dropped out of the race earlier this month. According to TheWall Street Journal, Mulally was frustrated with the search process and concerned about serving under/on a board that includes the only other two CEOs the company has ever had (Ballmer and co-founder Bill Gates). Other candidates for Microsoft's top spot have reportedly raised the same concern with the tech giant's directors.

That appears to have had some effect on Microsoft's board, as the nomination of the new CEO may be accompanied by other changes. Bloomberg reported that directors are considering having Microsoft lead independent director John Thompson take Gates' position as board chairman.

I (along with, I suspect, many Microsoft investors) would prefer to see an outsider take over the company at a time when it faces a terrain shift in the technology industry away from PCs toward mobile devices. Still, Nadella, who heads the cloud and enterprise division (formerly named the server division), is arguably the best internal candidate for the job. But "cleaning house" on the board is, in my opinion, the only way this insider will be able to think like an outsider and act freely to alter the course of this supertanker. Anything less and the task of choosing a new CEO will be half-complete.

Act now: Here's the one stock you must own for 2014
There's a huge difference between a good stock and a stock that can make you rich. The Motley Fool's chief investment officer has selected his No. 1 stock for 2014, and it's one of those stocks that could make you rich. You can find out which stock it is in the special free report "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

The article Microsoft's Nadella: Is the Safe Choice the Right Choice? originally appeared on

Alex Dumortier, CFA has no position in any stocks mentioned; you can follow him on Twitter @longrunreturns. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.