Microsoft is inching closer to naming a new CEO to replace Steve Ballmer, but one top candidate has removed himself from consideration.

After months of speculation, Ford CEO Alan Mulally told the Associated Press Tuesday that he would not be leaving his position to join Microsoft. "I would like to end the Microsoft speculation because I have no other plans to do anything other than serve Ford," he told the publication.

Despite his background outside the technology industry, Mulally's tenure at Ford has earned him a reputation as being effective in turning around a business. Some investors and analysts had hoped he might bring that expertise to Microsoft, which has ceded ground in recent years to competitors like Apple.

Microsoft's stock was down by more than 1.5% in early trading Wednesday, while Ford's stock increased by about 2%.

Though Mulally may be out of consideration, Reuters reports hearing from a source close to Microsoft's board that the company is making progress toward naming a candidate and down to a "handful" of possibilities.

Microsoft itself revealed last month that it had narrowed down the pool of possible successors from "over 100" to "about 20" and planned to name a new CEO by early this year. The company has not teased any names, but multiple reports suggest that the final crop of candidates includes Nokia CEO Stephen Elop, Skype CEO Tony Bates and, increasingly, top Microsoft exec Satya Nadella.

Ballmer, who has run the company for more than a decade and is only the second CEO in Microsoft's history, announced in August that he would be stepping down within 12 months — assuming the company could find a replacement by then.

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