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Microsoft president steps down

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CIOL Bureau
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Scott Hillis

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SEATTLE: Microsoft Corp. said on Wednesday that Rick Belluzzo, credited with

engineering a turnaround of the software giant's struggling MSN Internet unit,

would step down as president and chief operating officer after holding the jobs

for little more than a year.

Belluzzo, 48, will formally leave the positions on May 1, but will continue

to work at Microsoft through September, the Redmond, Washington-based company

said. Microsoft did not say who would replace Belluzzo, who joined the company

in 1999 became president and COO in February 2001.

A company spokesman was not immediately available to comment, but analysts

speculated the move stemmed from recent changes that apparently stripped

Belluzzo of some of his control over products and turned his job into more of an

administrative one.

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"It's not really a huge surprise. A lot of product groups under Belluzzo

have been transitioned out from under him in the last six months," said

Matt Rosoff, an analyst with Directions on Microsoft, a consultancy that

specializes in the company and is known for its detailed charts of the Microsoft

hierarchy.

Along with Belluzzo's announced departure, Microsoft also said it was

realigning its business structure to give its divisional chiefs greater

operational and financial responsibility.

"We realized we needed to give our core leaders deeper control and

accountability in the way they run their businesses, while at the same time

ensuring strong communication and collaboration across the business units,"

chief executive Steve Ballmer said in a statement.

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Bumping heads?



That change may signal that Belluzzo lost a turf battle as he struggled for
control over specific products, Rob Enderle of Giga Information Group

speculated. "I think he bumped heads and lost. The way they've redesigned

the firm, much of what Rick would have wanted is now gone. They gave him a fun

job and then took away the fun stuff," Enderle said.

Belluzzo was widely credited with engineering a turnaround for MSN, which

under his guidance drew millions of new subscribers and visitors and pulled the

operation into second place behind industry giant America Online.

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"His leadership on improving internal business systems and his role in

the development of key product initiatives including .NET, MSN and Xbox were

very significant contributions" . In a statement, Microsoft co-founder and

Chairman Bill Gates praised Belluzzo for "significant contributions"

to MSN, the new Xbox video game console, and the company's .NET strategy to roll

out Web-based services on a range of devices.

However, Rosoff said Belluzzo's role in developing MSN and a consumer .NET

initiative called MyServices had recently been scaled back, a possible sign that

his ideas were not succeeding. "The .NET MyServices business plan didn't

work out, they've retrenched and are reworking that now," Rosoff said.

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It's tough being No. 3



Belluzzo, who spent 23 years at Hewlett-Packard Co. before leaving in 1998 to
try to lead workstation computer maker Silicon Graphics out of a slump,

indicated he was leaving to pursue his own business venture.

"Given where Steve and I knew we needed to take the business, I decided

it was the right time to pursue my goal of leading my own company,"

Belluzzo said in a statement. Shares in Microsoft slipped 97 cents, or 1.7 per

cent, to $56.33 on the Nasdaq on Wednesday, as earnings warnings from other

software makers weighed on the industry. Belluzzo's departure was announced

after the close of US markets.

"It's hard to read much of a positive or negative into it. We certainly

hadn't gotten any wind of this," said Brendan Barnicle, an analyst with

Pacific Crest Securities. "From a news perspective it will get more

attention than from a stock perspective."

Microsoft has traditionally had trouble holding on to its No. 3 executive.

The first president, Jim Towne, was hired in 1982 and lasted nine months.

"They know there's no chance they will ever be No. 1 or No. 2. There's only

so much he can do before he gets bored," Rosoff said. "The No. 3

position has been tough to hold."

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