Microsoft Corp. (MSFT) said Wednesday evening that the president of its Platforms & Services Division, Kevin Johnson, will be leaving the company. In addition, the company announced that the division will be split into two groups, Windows/Windows Live and Online Services. Johnson, who played a key role in Microsoft's attempt to acquire Yahoo! Inc. (YHOO), will work to ensure a smooth transition.
Microsoft's Platform & Services Division includes the Client Group, the Server & Tools Group and the Online Services Group. The company said following the split, both the groups will report directly to CEO Steve Ballmer. Effective immediately, senior vice presidents Steven Sinofsky, Jon DeVaan and Bill Veghte will lead Windows/Windows Live and report directly to Ballmer. Microsoft noted that the Windows organization recently announced more than 180 million copies of Windows Vista sold globally, and it has driven more than 100 million installs of its Windows Live suite.
In the Online Services Business, Microsoft said it will create a new senior lead position and will conduct a search that will screen internal and external candidates. In the meantime, senior vice president Satya Nadella will continue to lead Microsoft's search, MSN and ad platform engineering efforts, the company noted.
In addition, senior vice president Brian McAndrews will continue to lead the Advertiser & Publisher Solutions Group. Microsoft noted that the group has great momentum, having signed more than 100 new publisher deals in the past year. McAndrews will continue to focus on the display advertising opportunity for Microsoft, driving execution and integration of advertising assets, including recent acquisitions such as Massive Inc., Navic Networks, ScreenTonic SA and YaData Ltd.
Johnson joined Microsoft in 1992, after his tenure at IBM Corp. (IBM), and has served as president of Microsoft's Platform and Services division since 2005. He led an organization of over 14,000 employees responsible for product development, marketing and strategy for the Windows and Online Services businesses.
Johnson, who was touted as a successor to Ballmer, successfully launched Windows Vista to consumers and commercial customers, resulting in Windows revenue of nearly US$15 billion in fiscal year 2007. Under Johnson's leadership, Microsoft completed over thirty acquisitions. In August last year, Johnson closed the company's largest acquisition, of aQuantive, Inc., to form Microsoft Advertiser & Publisher Solutions, and complement Microsoft's development of an online advertising platform.
Johnson was seen as a key player in Microsoft's bid to acquire Yahoo! The acquisition would have tripled the company's share of U.S. online queries, where it currently trails Google (GOOG) and Yahoo!. According to recent data provided by market research firm ComScore Inc. (SCOR), Microsoft's year-over-year June search engine market share dropped to 9.2% from 13.2%. However, the company maintained its third position in the U.S. search marketplace.
In May, Microsoft abandoned its bid for all of Yahoo! and instead attempted to persuade that company to sell its search business. However, Yahoo struck a deal to carry ads from Mountain View, California-based Google.
According to reports, Johnson will join Juniper Networks Inc. (JNPR). Juniper's Chief Operating Officer position has been vacant since January 2008, when ironically, Stephen Elop left the company to join Microsoft as president of Microsoft's Business Division, which includes the Office software franchise.
The departure of Johnson comes ahead of Microsoft's annual financial analyst meeting. Analysts are likely to question whether the company's online strategy is making sense. Microsoft is said to be laying out $6 billion a year in online spending to support efforts such as Windows Live.
Last week, Microsoft reported earnings for the fourth quarter that rose 42% from last year when results were weighed down by a hefty charge related to the expansion of the company's Xbox 360 warranty coverage. Microsoft's online services division posted revenue of $838 million in the fourth quarter, up 32% from a year ago. But the division's operating loss more than doubled to $488 million from $210 million last year.
MSFT closed Wednesday's regular trading session at $26.43, up $0.63 or 2.44% on a volume of 79.41 million shares. The stock has been trading in a range of $23.19-$37.50 in the past 52 weeks.
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