Is the Dream Over at Ford?

 | Nov 06, 2013 | 11:20 AM EST  | Comments
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At least it's all clear now, how you could report a miraculous quarter with a real head of steam yet the stock goes down. I am talking about the reversal in fortunes with CEO Alan Mulally perhaps leaving Ford (F) before the job is done to go to Microsoft (MSFT).

I don't want to believe it. I want to believe that he's not leaving. Some of it is selfish; we own it for the Charitable Trust. But some of it is the glaring nature of the unfinished job, of the need to put Europe solidly in the black and truly establish Ford as the world's most profitable truck and car company.

But when I listened to what Nomura analyst Rick Sherlund said this morning about how Mulally will be running Microsoft by next month, I guess the dream's over.

That said, if Rick, the axe in Microsoft, is right, then you have to buy Mr. Softee if only because it has been so undermanaged and there are so many legacy assets that can be jettisoned that the numbers go higher immediately.

I have known Rick for ages; we started on the same day at Goldman Sachs. Because he got the underwriting for Goldman and has always had the ear of Microsoft, I know this is not idle chatter. Nor would his supposition that Bing and Xbox, two ridiculous underperformers, would be sold to someone who can monetize them a heck of a lot better than Microsoft has.

In the end, Microsoft remains a personal computer play and that means that it is still in secular decline. But that doesn't mean that Alan Mulally has nothing to work with. Microsoft is a cash machine and Alan's a terrific allocator of cash. He can be a peacemaker and a uniter. He can figure out what belongs and who belongs --and who doesn't.

That said, we now know why Ford's been acting so horribly, which has been such a bummer for those of us who like the stock. And we know that Microsoft has taken the first giddy step we have seen since the 1990s -- and, boy, is that saying something.

Yes, I hope Sherlund is wrong. Yes, I hope that Mulally says, "Look, I am not going anywhere until this stock's much higher." But I no longer believe the soft non-denials. Sherlund's just too far out on a limb for me to believe otherwise.

Random Musings: Yes, the Zillow (Z) quarter was for real because the return on investment for brokers is so tremendous that this company can coin money. The shorts are in trouble here, as they are with OpenTable (OPEN), another one that they chronically bet against. The shorts can't be all that unhappy, however, given the defensiveness and negativity of what's happening at Tesla (TSLA) today. That story will stay troubled until the moment the battery shortage is solved and then the cult status will be restored, and I expect to see the stock go higher.

And if you believe in the oil story, you must listen to Pioneer (PXD) and Magnum Hunter (MHR) tonight.

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