Reports: Nadella and Mulally close in on Microsoft CEO role

Bloomberg cites sources suggesting the software giant could announce Ballmer's replacement before the year is out

Microsoft has narrowed its search for a replacement chief executive again, this time leaving just two candidates in the running, according to Bloomberg's sources.

Since current boss Steve Ballmer announced he would retire within a year back in the summer, the rumour mill has been working overtime as to who may be set to replace him.

Microsoft's Skype boss Tony Bates and Nokia chief executive Stephen Elop were reported to be in the running along with the software giant's cloud and enterprise leader Satya Nadella and Ford CEO Alan Mulally.

According to reports this morning, the latter two have made it to the final shortlist and one should be picked before the year is out.

The anonymous sources told Bloomberg that both Elop – who used to lead Microsoft's Office business – and Bates could still be in with a shout, but that they had been told Nadella and Mulally were more likely to battle it out for the top job.

The insiders expect Microsoft to unveil Ballmer's successor before the year is out, or at the start of the new year at the very latest.

The firm's chairman Bill Gates spoke emotionally about the search for Ballmer's replacement recently but declined to give a timeline despite saying the hunt was going well.