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Originally published January 31, 2014 at 5:44 PM | Page modified February 1, 2014 at 9:48 AM

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Will Bill Gates be out as Microsoft chairman?

Reports that Microsoft is about to name a new CEO are accompanied with news that the company’s board is considering a reshuffling that would move Bill Gates out of the chairmanship position.


Seattle Times technology reporter

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It wasn’t so long ago that the idea that Microsoft co-founder Bill Gates would step down as chairman of the board seemed far-fetched.

Now? Not so much.

Microsoft’s board, according to recent news reports, is apparently discussing the idea of replacing Gates as chairman — perhaps with John Thompson, CEO of Virtual Instruments.

Thompson, best known as former CEO of security-software-maker Symantec, is the lead independent director on Microsoft’s board. He also has been chairing the board committee searching for a successor to CEO Steve Ballmer, who announced in August that he would be retiring.

That search appears to be drawing to a close as the board is reportedly in contract talks with longtime Microsoft executive Satya Nadella to become the next CEO, according to The Wall Street Journal, which also said the board is meeting early next week to approve the contract and to discuss the chairmanship.

Nadella had apparently said that if he were to become CEO, he would ask for Gates to more closely advise him by spending “more time on technology and strategy,” according to The Journal, which cited a person familiar with the matter.

To have the time to do so — on top of his job as co-chair of the Bill & Melinda Gates Foundation — one option is for Gates to stay on Microsoft’s board but to relinquish his chairmanship duties, writes Kara Swisher at online publication Re/code. Those duties include providing leadership to other directors, running board meetings, organizing the board, working with the CEO and interact with shareholders and the investment community.

A more hands-on role for Gates at Microsoft would be a good thing, said analyst Sid Parakh with Seattle investment firm McAdams Wright Ragen.

“The titles don’t matter as much,” he said. “A better benefit for the company would be more direct involvement.

“He’s clearly one of the most brilliant people out there,” Parakh said. “And I think people still look up to him at Microsoft. He’s still revered.”

As for the idea of Thompson taking over as chairman, longtime Microsoft analyst Rick Sherlund with investment bank Nomura seems less than enthusiastic.

Sherlund has been advocating that the board take steps to enhance shareholder value by, among other things, repurchasing 10 percent of shares and reducing operating costs by 10 percent. This would help offset the other change Sherlund supports: that the company focus more on lower-margin but faster-growth opportunities such as with cross-platform apps.

But “in our conversations with Mr. Thompson, he has not appeared receptive to taking steps to enhance shareholder value through accelerated share repurchase, cost cutting and better focusing the business,” Sherlund wrote in a note to investors he sent out this week. “This could be disappointing for investors.”

He had also said several months ago that he believed Ballmer may decide to step off the board after a new CEO is named.

Sherlund reiterated that thought in his note this week, saying: “We question whether it will become necessary for Mr. Ballmer to step aside as a director to facilitate [changes that a new CEO — presumably Nadella — may make]. We do not think having two previous CEOs on the Board to report to as he redirects the business is a good idea.”

Janet I. Tu: 206-464-2272 or jtu@seattletimes.com. On Twitter @janettu



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