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Microsoft CEO Steve Ballmer is under pressure to make big changes  (Source: AFP)
Major executive shakeups continue for the world's largest OS maker

After a half decade with software giant Microsoft Corp. (MSFT) chief information officer (CIO) Tony Scott has left the company.  The departure was first revealed via an update to Mr. Scott's profile on LinkedIn Corp.'s (LNKD) titular resume site which listed his role at Microsoft as "former CIO".  The change was first noted by GeekWire, which received official confirmation from Microsoft shortly thereafter.

I. Tony Scott Steps Down

Prior to joining Microsoft in 2008, Mr. Scott has served as CIO at The Walt Disney Comp. (DIS), following executive assignments at General Motors Comp. (GM) and Bristol Myers Squibb Comp. (BMY).

Mr. Scott had been integral in pushing for heavier use of the so-called "dog-fooding" approach; a popular approach at Apple, Inc. (AAPL) and other successful software firms that involves giving test builds of upcoming products to employees to test drive prior to a full commercial rollout.  But that role was reportedly diminishing as Microsoft had moved towards consumer-facing cloud-based services like Office 365.

In a brief statement Mr. Scott commented:

My dad passed away at Easter time, so taking a little time to get my mother re-settled, get my instrument rating done (I’m a pilot), and work on a couple of other long delayed personal projects. Will go back to ‘work’ (in some form) in a few months, but right now just focusing on the above.

Tony Scott
Tony Scott, Microsoft's former CIO
 
Microsoft's IT product and services management vice president, Jim Dubois, will serve as the interim CIO.

II. Continuing Ballmer's "Significant Shift"

While it's unclear who will replace Mr. Scott, All Things D's Kara Swisher writes that Microsoft's Servers and Tools division president, Satya Nadella; Skype communications division president, Tony Bates; and Interactive Entertainment division president Don Mattrick will be among those that Microsoft CEO Steve Ballmer is considering.

Microsoft presidents
Microsoft's rising stars (left to right): Satya Nadella (Servers and Tools), Tony Bates (Skype), Don Mattrick (Interactive Entertainment)

Mr. Scott's departure is only the latest major shakeup in recent months at Microsoft.  In November, Windows division president Steven Sinofsky hit the road.  His position was subsequently divided between former CFO and CMO Tami Reller on the business/marketing front and by Julie Larson-Green on the software/hardware development front.

Last fall, Mr. Ballmer spoke of big changes at Microsoft commenting:

This is a significant shift, both in what we do and how we see ourselves — as a devices and services company. It impacts how we run the company, how we develop new experiences, and how we take products to market for both consumers and businesses.

The fresh focus on becoming a devices and services company (rather than merely an OS and software firm) comes amid shareholder demands for more of a return on their investment.  

III. Investors Demand Change

A subsidiary of Japanese investment house Nomura Holdings, Inc. (TYO:8604), Nomura Equity Research, has been tracking the dispute.  Its analyst Rick Sherlund in a research note pushed Microsoft's management to sell the Xbox unit (a cash-neutral unit, according to reports) and the Bing search product (a major money loser).

Xbox One
Some investors want Microsoft to sell its Xbox unit.

Disruptive investor David Einhorn has tried to push for Mr. Ballmer's resignation and similar big shakeups since early 2011.  However, with only 0.11 percent of shares (at the time) and with Microsoft posting a very strong fiscal 2011 his cries fell mostly on deaf ears.

David Einhorn
David Einhorn (Greenlight Capital) wants Ballmer's resignation. [Image Source: Value Walk]

But slowing PC salescriticisms about its design direction with Windows 8, and narrowing financials have renewed the calls for change.  ValueAct Capital Parnters, a firm managed by Jeff Ubben, recently acquired approximately 1 percent of Microsoft shares (for reference CEO Ballmer owns approximately 4 percent of Microsoft shares).  Mr. Ubben has joined the push for changes, albeit stopping short of Mr. Einhorn's most draconian demands, such as Mr. Ballmer's resignation.

Thus it appears that while Mr. Ballmer's seat may be secure for now, his executive team and business strategies are slotted for some big shakeups.

Sources: LinkedIn [Tony Scott], GeekWire, All Things D



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This article is over a month old, voting and posting comments is disabled

Uh
By NellyFromMA on 6/3/2013 12:52:33 PM , Rating: 4
Nothing in this article connects the CIO's departure with the company's shifting identity. Just saying.




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