When a CEO is appointed, for some companies due to market share or a seemingly monopoly it is often considered the person has won the lottery because they will be well compensated and for the most part the company can run by itself. In a normal decade the CEO will be changed, and little has happened. This could be very good because the company remained profitable and paid dividends. Sometimes the opposite is the case, the CEO makes decisions which dramatically affects the company for the better.

In an article by Karen Weise and Cde Metz of the New York Times News Service, one of these cases is Satya Nadella of Microsoft. In the past 2 years, Microsoft has spent billions on AI and the stock is up 70% and the company is worth more than $3.3 trillion.

Mr. Nadella sees the AI boom as an all-in moment for his company and the rest of the tech industry. Mr. Nadella aims to ensure Microsoft which was slow to the dot-com boom (even though they used a Rolling Stone’s song in one of their advertisements) and missed the smartphones (Apple and Android dominate), Microsoft wants to dominate this new technology using AI.

Mr. Nadella has made billion-dollar acquisitions before including $69 billion to acquire video game publisher Activision Blizzard to add to Xbox. (people spend more money on gaming than they do to watch movies or entertainment).

Mr. Nadella pushed Microsoft to embrace cloud computing and open-source software that Microsoft that customers could freely adapt. Every company has a tradition of either doing it themselves or with the help of others. Microsoft was a company that want most of the work done in house. Open source means any software developer can add on ideas. That decision helped Microsoft become the number 2 market share behind Amazon or AWS in cloud computing.

In 2018, Mr. Nadella made a final decision after a 20 minutes meeting with other senior leaders at an annual executive retreat at the Suncadia Resort in the Cascade Mountains to buy GitHub. After spending years debating whether to link with GitHub, a decision was made to go forward and within weeks, Microsoft bought GitHub for $7.5 billion.

To make Microsoft’s cloud more sophisticated, Mr. Nadella made a $1 billion investment in OpenAI. The investment allowed for rights to OpenAI’s products and the innovative cloud customers. The main reason for the investment was Mr. Nadella believed OpenAI was doing something fundamentally different and better than Microsoft. (doing your homework never stops). After acquiring the rights, Microsoft went into the metaverse products but they did not sell well. The next product was GitHub Copilot, a tool for software developers to automate code writing. It was very well received and Mr. Nadella was all in for AI products.

Linking to dividend paying stocks, sometimes who is the CEO is extremely important for they can change the company for the better in the eyes of shareholders. Companies spend a great deal of time and effort, particularly at the Board level of who will lead the company. At the Board level there is a committee to examine the senior management and their performances and decide on their futures. You will often hear the President talk about the quality of the people and the bench strength. For your investments, do you have confidence in the next level of senior management? Is there someone who you expect to make changes to the company?

There are more questions than answers, till the next time – to raising questions.