Is Reed Hastings Microsoft's Next CEO?
Microsoft will be searching high and low for a new CEO in the coming weeks and months, but its best choice may have been someone who was sitting in its boardroom until late last year.
Netflix CEO Reed Hastings is a dark horse candidate. Social wagering bookie Ladbrokes has the odds of Hastings stepping up as the software giant's next chieftain at 16-to-1. That's not very assuring, but it's certainly not a long shot.
A lot of savvy financial writers are posing the possibility. TheStreet.com's Rocco Pendola, tech blog The Verge, and even The Chicago Tribune have tossed out the idea of Hastings at the helm in recent days, and it's not as outlandish as it may seem.
Hastings is on top of the world right now. He succeeded in what Microsoft has failed to do, and that's turn a company from being disrupted to being the disruptor.
In 2007, Hastings pushed into streaming even if it would ultimately slay its DVD rentals business. In 2007, Microsoft watched as Apple introduced the iPhone, the gadget that would ultimately transform smartphones and eventually tablets into the computing choice of the new generation.
Yes, there's the Qwikster fiasco. That one's on him. However, that's small potatoes compared to Kin, Zune, Vista, and other Microsoft missteps.
Microsoft emphasized in Ballmer's going-away press release that it's transforming itself from a software company to one that's centered around products and services. Hastings may not be a products guru, but it's hard to argue that the guy at the helm of the biggest consumer of primetime bandwidth with its growing streaming service isn't the right choice to push Microsoft into a world of premium services.
Hastings is no stranger to Microsoft. He sat on the board for five years before deciding not to run for reelection last year. There was always the speculation that Hastings was fearing a conflict of interest if Microsoft's new Xbox arm would eventually roll out a rival streaming platform. There was also the chatter that Microsoft would acquire Netflix, which in retrospect would've been terrible for the shareholders who have seen the fivefold pop over the past year.
However, a more plausible reason for Hastings' abrupt boardroom exit appears to be surfacing. Sources tell AllThingsD's Kara Swisher that Hastings was the first board member to urge Bill Gates to remove Ballmer as CEO. When it didn't happen, it's understandable to see Hastings go instead of creating friction.
If that's the case, it's yet another example of Hastings proving to be the visionary that Microsoft sorely needs.
Would Hastings want the job? That's a fair question. Netflix is rocking these days, but it actually traded slightly higher two summers ago. It didn't last. Hastings would hate to see that play out again, and it would be hard to scoff at a buyout at these levels if it came at a healthy premium. Most stocks would take a beating if they were paying a huge markup on top of Netflix's present froth, but if it gives Microsoft the CEO it needs, it may very well spark the software behemoth to move even higher.
And unlike Apple's acquisition to get Steve Jobs back, Microsoft will be getting a company in Netflix that it can sorely use as it tries to make a dent in the smartphone and tablet markets, where it's currently commanding a measly 4% share. A Microsoft-owned Netflix could raise the status of Windows tablets and smartphones if it were to pepper in a few extras that Android and iOS users couldn't get. We saw how big Netflix was for Xbox when it was the only console that allowed streaming. It would be stupid to nix support for iOS and Android, but Microsoft can make sure that Netflix updates and features would be incorporated in Windows apps first.
So what is Microsoft waiting for? It's time to Reed 'em and reap.
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The article Is Reed Hastings Microsoft's Next CEO? originally appeared on Fool.com.Longtime Fool contributor Rick Munarriz owns shares of Netflix. The Motley Fool recommends and owns shares of Apple and Netflix. It 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.
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