Kara Swisher

Recent Posts by Kara Swisher

Update: As Microsoft Restructuring Nears, Top Execs Fret Over Their Fate

According to sources close to the situation, Microsoft CEO Steve Ballmer is likely to unveil his plans to restructure the tech giant to a larger group of senior execs around the beginning of July.

That prospect has many top managers at the company worried, since Ballmer has been making these significant plans with limited consultation with the wider leadership group at the software giant. Instead, he has been working with only a small group of his direct reports and also some Microsoft board members, numerous sources said.

That has meant that most senior execs have largely been left out of the decision-making process related to Ballmer’s goal of solidifying Microsoft into the “devices and services company,” that he wrote about in his annual shareholder letter last October.

The impending changes — and the lack of information about them — has made for some level of discomfort inside Microsoft, where many high-ranking managers have been at the company for a very long time.

“It feels like it is going to be titanic — that Steve is doing this change for his legacy,” said one person close to the situation. “And it’s the first time in a long time that it feels like that there will be some major shifts, including some departures.”

That has certainly happened under Ballmer, such as when Windows chief Steven Sinofsky left the company late last year. There was also a major reorg in 2008.

Other top execs who have departed over the last several years include: Kevin Johnson, who became CEO of Juniper Networks, after 16 years at Microsoft; Jeff Raikes, who arrived at Microsoft in 1981 and is now CEO of the Bill & Melinda Gates Foundation; and the twin departures of Robbie Bach — who was at the company for 22 years, until his retirement in 2010 — and 15-year veteran J Allard, although he remains an advisor to Ballmer.

But those were largely one-offs, and Microsoft has not seen a change like what is expected to come since some similarly dramatic rejiggerings were done by former CEO and co-founder Bill Gates during his tenure.

That’s why another source said that the level of worry has grown, since there have been rampant internal rumors about what will happen, but no real change as yet. “It would be funny if Ballmer did nothing in the end,” said the source. “But no one thinks that’s possible now.”

A Microsoft spokesman declined to comment.

As I had previously reported, according to several people close to the situation, the new configuration could include larger roles for several execs, with business units being moved around into new divisions. But, sources noted, there could also be some significant departures.

Focus internally is especially strong on Satya Nadella, president of Microsoft’s Servers and Tools division; Tony Bates, president of its Skype communications unit; and Don Mattrick, president of its Interactive Entertainment division. In addition, many are wondering how the job of Qi Lu, president of Microsoft’s Online Services unit, will shift, as well as that of Terry Myerson, who runs the company’s Windows Phone division.

But it’s unclear how their new and perhaps expanded roles, and those of others in top management, will shake out. That is, until Ballmer weighs in.

Many expect him to soon begin unveiling his plans internally, just ahead of the end of Microsoft’s fiscal year. It’s not clear when a public announcement will be made.

One thing seems certain — a simplification of the structure to clarify its current and decidedly more convoluted set-up. And how Microsoft’s flagship software product, Windows, fits into the new org, will be the most interesting part of the puzzle.

The possible restructuring comes amid increasing investor pressure on Microsoft, including a recent run-up in its stock and a renewed effort by activist shareholders urging that some level of change take place at Microsoft.

The company will be on display to developers this coming week at Microsoft’s Build conference in San Francisco, where it will show off a series of initiatives for Windows, Bing and its servers products, among other things.

Latest Video

View all videos »

Search »

The problem with the Billionaire Savior phase of the newspaper collapse has always been that billionaires don’t tend to like the kind of authority-questioning journalism that upsets the status quo.

— Ryan Chittum, writing in the Columbia Journalism Review about the promise of Pierre Omidyar’s new media venture with Glenn Greenwald