Microsoft is gearing up for the holiday season by wishing for a new CEO. The company has trimmed its CEO choices down to five, according to a report last night from Reuters. Many observers still consider former Nokia CEO Stephen Elop to be the favorite.

Microsoft shares popped 3 percent on the news this morning. Why? Hard to tell, but maybe investors just needed to be reassured there will be a new CEO. 

In the Running

The list of candidates has shrunk from 40 to five and includes Ford Motor Co. CEO Alan Mulally, Elop, former Skype CEO Tony Bates, who is now responsible for Microsoft's business development, and Satya Nadella, the company's cloud and enterprise chief, Reuters said, citing sources close to the company. Another name in the mix is Computer Sciences Corp CEO Mike Lawrie. 

The executives named come from varied backgrounds. Mulally and Lawrie are considered to be big-company turnaround artists. Elop, Bates and Nadella are all technology specialists. 

The Microsoft board will have to make a crucial choice between a Microsoft insider or an outside turnaround boss that is willing to shake things up. Mulally, who re-directed and strengthened Ford's business after the financial crisis of 2008/2009, would have to make a transition from cars to mobile phones, which is a more challenging and dynamic market.

Insider or New Blood?

Part of the board's decision will be potential big strategy shifts for the company. If it selects somebody favoring restructuring, the market is likely to see radical moves such as a spin-off of parts of the company such as Xbox. A Microsoft insider means the company is more likely to stay intact. 

Despite the fact that things are said to be getting narrowed down, speculation will continue about other industry long-shots, just because, well, it's fun. Other interesting choices that have been mentioned include Facebook COO Sheryl Sandberg or even Bill Gates, Microsoft's Co-Founder and former CEO.

The Odds

British sports-betting shop Ladbrokes continues to run odds on the Microsoft successor, heavily favoring Elop at 1/7 odds, according to the latest report from the UK paper The Telegraph. Here are the rest of the odds, according to the Telegraph:

  • Stephen Elop 1/7
  • Alan Mulally 6/1
  • Satya Nadella 7/1
  • Tony Bates 10/1
  • Mike Lawrie 20/1
  • Sheryl Sandberg 25/1
  • Bill Gates 50/1

The selection process is expected to last several months, with Ballmer having stated he will retire by the first half of next year.