Microsoft ousts server unit head

By : |January 11, 2011 0

SEATTLE, USA: Chief executive Steve Ballmer has ousted the head of Microsoft Corp’s third-largest unit, marking the latest in a series of high-level departures as the software company tries to regain its leadership in the technology sector.

Overtaken by Apple Inc as the world’s most valuable tech company last year and stung by a stagnant stock price for the last decade, Microsoft has been shaking up its top leadership for several years.

In the last 15 months alone, the company has lost chief software architect Ray Ozzie, office unit head Stephen Elop, entertainment and devices unit head Robbie Bach and chief financial officer Chris Liddell.

Of the leaders of its five business divisions, only online chief Qi Lu has the same role he did two years ago.

The latest to leave is Bob Muglia, a 23-year veteran of the company. Muglia, who will stay on until this summer to help his eventual replacement settle in, runs Microsoft’s $15 billion a year Server and Tools business, which sells server and database software to companies.

An internal memo from Ballmer indicates Muglia was pushed aside in a disagreement over strategy.

"Bob Muglia and I have been talking about the overall business and what is needed to accelerate our growth," Ballmer wrote in the memo, which was made public. "In this context, I have decided that now is the time to put new leadership in place for STB (the server and tools business)."

No replacement has been named. Ballmer said he would look for candidates inside and outside the company.

"It sounds like he was asked to leave," said Sid Parakh, analyst at McAdams Wright Ragen. "It seems like there was disagreement over strategy."

Microsoft’s server and tools business, smaller than only its flagship Windows and Office units, has been growing steadily over the past few years, and is leading the company’s push into "cloud computing," or selling access to storage and computing power online.

Microsoft has long been considered a buyer in the server and database sector, but analysts said it was hard to see an obvious target.

Its main rivals in the business are Oracle Corp and Germany’s SAP. Microsoft Chief Financial Officer Peter Klein said last year that the company had looked into buying SAP five years ago, but was not looking to do a deal now.

In October, there was talk that Microsoft might make an offer for Adobe Systems Inc, maker of the Flash media player and Acrobat document software. Adobe shares rose 2.5 per cent Monday in a broadly flat Nasdaq.

Microsoft’s shares were down 1.3 per cent to $28.22 on Nasdaq in late afternoon. They are trading about the same level as they did 10 years ago.

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