Microsoft Corp. (Nasdaq: MSFT), the world's top software company, ousted Windows VP Steve Sinofsky, 47, only two weeks after shipment began of the expensively developed Windows 8 OS.
In language crafted to lessen the sting, the Redmond, Wash., based Microsoft said Sinofsky “will be leaving the company” and said he'd be replaced by two longtime associates, Julie Larson-Green, who'll handle engineering, and Tami Reller, CFO of Windows, who'll handle sales and marketing.
“I am grateful for the many years of work that Steve has contributed to the company,” said Microsoft CEO Steve Ballmer, 56. The language is similar to what companies use when they fire a senior official. There had been reports Sinofsky could be a potential successor to Ballmer, who succeeded Bill Gates, 57, as the company's second CEO in 2000. Gates remains chairman but isn't involved with daily operations.
The ouster may indicate that with Windows 8, Microsoft laid another egg, comparable with prior software glitches. Demand for PCs and laptops had been tepid in recent months as consumers and enterprises delayed new orders, pending release of the new OS. But is could also indicate Sinofsky has landed another job, likely as head of another company.
In the past, many senior Microsoft executives have left to run other businesses, such as CFO Gregg Maffei, who was CEO of ill-fated 360 Networks but then went on to Oracle Corp. (Nasdaq: ORCL) as CFO and now is CEO of Liberty Media Corp. (Nasdaq: LMCA). Ray Ozzie, the chief technical officer, quit in 2010 after five years in that post and set up private Cocomo last January.
On Thursday, Dell Inc. (Nasdaq: DELL), now the No. 3 PC maker, is expected to report third-quarter results, followed next week by Hewlett-Packard Co. (NYSE: HPQ), now the No. 2 PC maker, with fourth-quarter numbers. Both will include shipments through the end of October.
Their reports may indicate how Windows 8 is doing.
The moves at Microsoft come just two weeks after Apple (Nasdaq: AAPL), the most valuable technology company, ousted its senior software VP, Scott Forstall, for the disastrous launch of the iPhone 5 without adequate house-developed software for maps. Earlier versions of the iPhone used Maps from Google (Nasdaq: GOOG), but that was removed from iPhone 5.
Analysts were mixed on the news. Rick Sherlund, now at Nomura Securities but who spent decades at Goldman Sachs (NYSE: GS) which handled Microsoft's 1986 initial public offering, said it was "too early" to say if Sinofsky's departure reflects poorly on Windows 8. It's only a "near-term" event, he said. But Walter Pritchard of Citigroup Securities (NYSE: C) viewed the move as "negative" because Sinofsky's overall track record had been good with earlier verions of Windows such as Vista and Windows 7.
Shares of Microsoft fell 90 cents to close $27.09, down about 3 percent, in Tuesday trading.