Head of Microsoft’s Online Efforts Departs

Kevin Johnson, the executive in charge of Microsoft’s struggling online business, is leaving the company. Microsoft announced Wednesday evening that Mr. Johnson was departing to become chief executive of Juniper Networks.

Mr. Johnson, 47, is leaving as his boss, Steven A. Ballmer, Microsoft’s chief executive, is shaking up the senior management ranks in an effort to improve the fortunes of the company’s Internet search and advertising business. Microsoft is a distant third behind Google, the leader, and Yahoo in this field, having been unable to catch up despite heavy spending.

The change also comes after Microsoft’s failed bid for Yahoo. Mr. Johnson played a central role in negotiations with Yahoo.

Under the new plan, responsibility for the two businesses overseen by Mr. Johnson — online services and the Windows operating system unit — will be separated.

Microsoft, in a statement, acknowledged that it needed new leadership to lift the performance of the online services business. The company said it would “create a new senior lead position and will conduct a search that will span internal and external candidates.”

In Microsoft’s most recent quarter, which ended June 30, revenue from online services increased 24 percent from the year-earlier quarter, to $838 million. But the business’s loss for the quarter more than doubled to $488 million.

Microsoft’s lackluster performance in online services, analysts note, began well before Mr. Johnson took over in September 2005, with the title of president of the platforms and services division.

“But he didn’t turn it around either,” said Charles di Bona, an analyst at Sanford C. Bernstein. “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.”

After joining Microsoft in 1992 from I.B.M., Mr. Johnson rose steadily, serving mainly in sales and marketing positions. He was a member of the 10-person senior leadership team at the company.

A colleague who declined to be named said Mr. Johnson wanted to become a chief executive someday — an unlikely prospect at Microsoft, given that Mr. Ballmer is 52.

Mr. Johnson championed Microsoft’s $44.6 billion bid for Yahoo in February as the best way to gain ground quickly in online services. The offer had the support of the activist investor Carl C. Icahn, a Yahoo shareholder who threatened a proxy fight to get control of Yahoo.

But the two sides, after a series of talks, failed to reach agreement, though Microsoft has said it remains interested in Yahoo’s search business, if not the entire company. Mr. Icahn is likely to continue agitating for a deal.

Source : New York Times