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Ford (F) Board Wil Press Mulally on Possibility of Joining Microsoft

Stocks in this article: F MSFT NOK

NEW YORK (TheStreet) -- Ford's (F) board of directors will reportedly press CEO Alan Mulally about any plans he may have to replace Steve Ballmer as CEO of Microsoft (MSFT).

The board will discuss the possibility at a meeting scheduled for today. Mulally is one of a handful of candidates currently in contention to take Ballmer's place in the near future. The current Ford CEO hasn't commented on the matter publicly, and sources talking to Reuters claim that's an area of frustration for the company's board.

The board wants clarity on the situation to help get rid of what is seen as a distraction. "It's drowning out the rest of the story," says a source. "People don't write about Mustang, they don't write about earnings, they write about Mulally."

Mulally is currently slated to stay at Ford through 2014, though he will likely leave before the end of next year. Current Ford COO Mark Fields is the considered the frontrunner to replace Mulally as CEO of the carmaker.

Microsoft CEO Steve Ballmer announced his intention to retire in the near future earlier this year. Other candidates to take over the role of CEO include outgoing Nokia (NOK) CEO Stephen Elop. Elop will rejoin Microsoft when the company completes its acquisition of Nokia's mobile devices division next year.

TheStreet Ratings team rates Ford as a "buy" with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate FORD MOTOR CO (F) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, good cash flow from operations and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 12.4%. Since the same quarter one year prior, revenues rose by 11.8%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, F's share price has jumped by 48.01%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, F should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • Net operating cash flow has increased to $3,840.00 million or 12.05% when compared to the same quarter last year. Despite an increase in cash flow, FORD MOTOR CO's cash flow growth rate is still lower than the industry average growth rate of 31.30%.
  • FORD MOTOR CO's earnings per share declined by 24.4% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, FORD MOTOR CO reported lower earnings of $1.42 versus $5.01 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $1.42).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, FORD MOTOR CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: F Ratings Report

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