Stephen Elop, Microsoft’s prodigal son returns, and now he is the clear favorite to take over for the departing Steve Ballmer.
Microsoft is paying $7.2 billion for Finnish phone-maker Nokia, headed by Elop, in a deal that brings him back to his former company, where he once ran the Office division.
“Sure, he’s the odds-on favorite” to replace Ballmer, according to BGC Partners analyst Colin Gillis.
Ballmer, in a surprise announcement last month, said he would leave Microsoft within a year — after 33 years at the software giant, the last 13 as CEO.
The retirement plans set off a round of speculation regarding the future of the Redmond, Wash., company, whose shares are down over Ballmer’s tenure.
The CEO’s plan to step down comes just after he established a roadmap for the future at the company — ensuring his legacy remains intact.
The company reorganized itself from a sprawling corporate giant broken into fiefdoms into a more centralized structure that unites its disparate groups under one flag.
Microsoft is sticking to the Ballmer vision — which was reinforced by the purchase of Nokia — to compete with Apple and Google on hardware, software, services and the mobile future.
Disgruntled investors, namely ValueAct, which was pressing for a fight with Microsoft’s board before coming to an arrangement last week, had been hoping Microsoft would focus more on the enterprise and corporate world and lay off its consumer aspirations.
Industry watchers have said Microsoft’s best bet would even be to break up the business, spinning off consumer-facing units like XBox, and sticking with the core software services.
The Nokia move was a clear sign that the consumer side of Microsoft stays. Nokia and Microsoft have been partners in mobile handsets since 2011, a tie-up hatched by Elop and Ballmer.
The smartphones from the union have helped Microsoft become the No. 3 mobile player ahead of BlackBerry but behind Apple and Google’s Android.
Still, Microsoft flopped in its latest attempt at making its own hardware and software. The development of the Surface tablet led to a $900 million writedown last quarter after it failed to sell.
“Microsoft has yet to prove it can successfully bring to market a compelling device that can gain meaningful traction with consumers,” Barclays analysts said in a note to clients.
Shares in Microsoft dived lower yesterday on word of the Nokia deal, falling as much as 6.3 percent before closing at $31.88, down 4.6 percent.
The Nokia purchase is expected to close in the first quarter of 2014.
Ballmer downplayed the notion that the buy gives Elop a leg up in the CEO search.