Ballmer’s Shake-Up Leads to Departure of Online Business Head At Microsoft

In an announcement Wednesday, Microsoft Corp. announced the departure of seasoned executive Kevin Johnson. Johnson, who was the head of Microsoft’s online business, a struggling entity in recent times, and also one of the main players from Microsoft in its failed Yahoo merger bid, would now serve as the CEO of Juniper Networks Inc.

Johnson’s departure is possibly part of a reshuffle of the senior management at Microsoft to ensure the Internet search and advertising business of the company fared better than it has been in recent times. The company has invested a lot of money into this venture, but has not been able to really achieve much, with industry leader Google and second-placed Yahoo way ahead.

The recent quarterly performance of Microsoft’s online services business tells the tale. According to the quarter ending June 30, though the service registered a 24% increase in business from the same time last year, ending up with $838 million, it still registered a loss of $488 million, over two times the number for the same time last year.

According to analysts, it was not like the poor performance of the online services business at Microsoft started only after Johnson became the president of the platforms and services division in September of 2005. The business was already faring poorly. However, what went against Johnson was the fact that it did not register an upswing after his entry into the scene.

Speaking about the issue, Sanford C. Bernstein analyst Charles di Bona said, “But he didn’t turn it around either. There are a lot of questions to be answered about Microsoft’s online services business, particularly because the company has spent so much there without much to show for it.”

It was also Johnson who was one of the driving forces behind Microsoft’s Yahoo acquisition bid, a move that ended in failure.

With the departure of Johnson, there would be a slight change in the structure of the organization he headed as well. A Microsoft release said the division would now become two separate entities - Online Services and Windows/Windows Live, with both these entities reporting straight to Microsoft CEO Steve Ballmer.

Speaking about Johnson’s departure and the way forward, Ballmer said, “Kevin has built a supremely talented organization. This new structure will give us more agility and focus in two very competitive arenas.”

An unnamed associate of Johnson cast new light on the whole issue when he said that Johnson also had the desire to be a CEO at some point in time, something that was not likely to happen at Microsoft soon, considering the current CEO was just 52.

Speaking of his experience at Microsoft during the 16 years he worked there, Johnson said, “Microsoft is a special place and presents opportunity to so many.”