Bloomberg News

Microsoft Said to Reassure Workers That Plan Is On Track

August 26, 2013

Microsoft CEO Steve Ballmer

Microsoft Corp. Chief Executive Officer Steve Ballmer is refocusing Microsoft on hardware and Internet-based services, in a bid to move the company away from software for the declining personal-computer industry and onto better footing with Google Inc., Facebook Inc. and Apple Inc. Photographer: David Paul Morris/Bloomberg

Microsoft Corp. (MSFT:US) is moving to reassure employees that a reorganization plan by departing Chief Executive Officer Steve Ballmer will go ahead.

Some members of Microsoft’s senior leadership team e-mailed their staff Friday to say they remain committed to Ballmer’s vision and the reorganization, said two people with knowledge of the matter, who asked not to be identified because the e-mails were private.

The communications follow concern at the software maker that any new CEO -- especially an external one -- won’t keep the company as Ballmer laid out last month in the biggest restructuring in more than a decade. Ballmer is refocusing Microsoft on hardware and Internet-based services, in a bid to move the company away from software for the declining personal-computer industry and onto better footing with Google Inc. (GOOG:US), Facebook Inc. (FB:US) and Apple Inc. (AAPL:US)

“There’s going to be more confusion near-term,” said Sid Parakh, an analyst at McAdams Wright Ragen in Seattle. “It just seems like now there’s the question of how’s the new person going to look at these changes. From an employee perspective, they are at a point of ‘OK, now what do we do here?’”

Tony Imperati, a spokesman for Redmond, Washington-based Microsoft, declined to comment.

As Planned

Microsoft’s leadership team also held a previously planned meeting on Friday, said the people with knowledge of the matter. Microsoft’s board stressed in statements Friday that a new CEO will execute Ballmer’s strategy.

Already behind in mobile and tablets and with new products scrounging up minuscule market share while its core revenue from the Windows operating system shrinks, Microsoft can ill afford to wait and see if a new CEO alters the Ballmer plan. The company’s stock is down about 37 percent under Ballmer’s tenure as CEO, which started in January 2000. Last month, Microsoft also reported sales and profit that missed analysts’ estimates.

Now as Microsoft embarks on a new CEO search, it will also have to contend with retaining employees and tamping down unease that for some began with the July reorganization.

Microsoft executives and workers in the process of moving into new divisions and roles don’t know if they will be asked to shift again under new management, said one of the people. Some executives unhappy with their new roles may leave after stock grants and bonuses are given at the end of August, said another person.

Microsoft executives have also received an increase in outside job offers since the reorganization and expect that to accelerate as the next CEO remains to be chosen, said another person with knowledge of the matter.

Ballmer’s reorganization, which put all of Microsoft’s hardware into one unit and shifted the Windows and Windows Phone operating systems under the same executive, was undertaken with the knowledge that a new CEO might end up at the company’s helm, said another person with knowledge of the matter. It didn’t make sense to put the changes on hold for as much as a year until a new CEO was in place, the person said.

To contact the reporters on this story: Dina Bass in Seattle at dbass2@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net;


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Companies Mentioned

  • MSFT
    (Microsoft Corp)
    • $45.94 USD
    • -0.42
    • -0.93%
  • GOOG
    (Google Inc)
    • $568.53 USD
    • -8.82
    • -1.55%
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