Reuters quoted "sources familiar with the process" as saying Microsoft is down to "a handful of individual names."
The shortlist reportedly includes former Nokia (NOK - Get Report)/Macromedia/Boston Chicken boss Stephen Elop, internal candidates Satya Nadella and Tony Bates as well as one or more outsiders. Those sources also confirm Mulally is now officially out of the running.
Mulally told The Associated Press he plans to stay as Ford at least through 2014.
Mulally said, "I would like to end the Microsoft speculation because I have no other plans to do anything other than serve Ford. When asked whether investors could stop being distracted by the speculation Mulally answered, "You don't have to worry about me leaving."
On the other hand, Mulally didn't reveal his plans after 2014 or whether he'd be interested in the Microsoft post at that time.
Microsoft did't give any clues as to when it might be able to announce its new boss. The company's executive search committee, headed by Bill Gates, had hoped to name a successor to Ballmer by the end of last year.
-- Written by Gary Krakow in New York.
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