Update: Windows and online chief to leave Microsoft in wake of Yahoo tussle

Kevin Johnson packs his bags

Microsoft Corp.'s president in charge of its embattled Windows Vista and online products is leaving Redmond.

The departure of Kevin Johnson, chief of Microsoft's platform and services division, will also pave the way for a reorganization of the 14,000-strong unit, which oversees products and services such as Windows Vista, Windows Live, and Web search and advertising.

The trio of executives that formerly reported to Johnson will now report directly to CEO Steve Ballmer to help run Windows and Windows Live. That trio is senior vice president Steven Sinofsky, who is leading development of the next version of Windows; senior vice president John Devaan, who oversees development of Windows' core components and architecture; and recently promoted senior vice president Bill Veghte, who will oversee sales and marketing of Windows.

Joining Microsoft in 1992, Johnson "had a career arc in the company that echoed Steve Ballmer's in some ways, and he would have been on anyone's short list to replace the CEO," according to Rob Helm, an analyst at the independent Directions On Microsoft. "His departure suggests an important rift over strategy."

The news was first reported by The Wall Street Journal, which cited anonymous sources, and was confirmed in a press release sent by Microsoft half an hour later.

"Kevin has built a supremely talented organization and laid the foundation for the future success of Windows and our Online Services Business. This new structure will give us more agility and focus in two very competitive arenas," said Ballmer in the statement. "It has been a pleasure to work with Kevin, and we wish him well in the future."

The Journal article linked Microsoft's failure to buy Yahoo Inc. with Johnson's departure. That the online services business remains a financial failure could not have helped, either. The unit lost $1.23 billion in operating income in fiscal 2008, nearly double that in the prior year.

"This departure and the last quarter's results just underline how hard running the online business is going to be," Helm said.

According to the Journal, Johnson will leave to become CEO of Silicon Valley networking vendor Juniper Networks Inc.

Neither Microsoft nor Johnson confirmed that in the press release. And Juniper officials did not immediately return a request for comment.

For now, Scott Kriens appears to remain chairman and CEO of Juniper, a $3 billion vendor and challenger to market leader Cisco Systems Inc. Juniper is highly profitable, though revenue growth has slowed, leaving its stock down.

However, Juniper's COO position has been vacant since January -- when, ironically, Stephen Elop left Juniper to join Microsoft as president of its business division, which includes the Office software franchise.

While Microsoft will conduct an internal and external search for a replacement to run the online group, other online executives will remain, according to Microsoft. Senior vice president Satya Nadella will continue to lead Microsoft's search, MSN and ad platform engineering efforts.

Senior vice president Brian McAndrews will continue to run the advertiser and publishing solutions group, which, according to Microsoft, has signed more than 100 new publisher deals this year.

A 16-year veteran of Microsoft, Johnson leaves the company with $13 million in stock, according to a recent Securities and Exchange Commission filing.

Gregg Keizer contributed to this story.

Copyright © 2008 IDG Communications, Inc.

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