Microsoft 's New Structure: Eight CFOs, No President

The software company has named financial execs for each of its seven business units in an effort to boost accountability for how each unit performs.

InformationWeek Staff, Contributor

July 23, 2003

2 Min Read

SEATTLE (AP) -- Microsoft Corp. still lacks a president but it now has eight chief financial officers.

The Redmond-based software company in recent weeks has finished naming financial executives to head each of its seven business units. The unit CFOs will all report to the heads of the business units.

John Connors, Microsoft's CFO since 2000, remains the corporation-wide chief financial officer and will work with each of the business unit finance executives.

The chief financial officers will mean better accountability for how each individual business unit performs, said Microsoft spokesman Kent Hollenbeck. In addition, it will let investors see more clearly how each unit is faring.

Microsoft indicated that it would appoint people to such positions about a year ago when it started breaking out the finances of its seven units, Hollenbeck said.

Although many of the executives have been around for months, Microsoft may now be trying to give them a higher profile, said Matt Rosoff, an analyst with Kirkland-based Directions on Microsoft, an independent research firm that focuses on the company.

"Microsoft is under some pressure (from investors) to improve the numbers, particularly in the new businesses," he said, including its Xbox video-game business. "Maybe they're giving these people a little more public air time."

The company started splitting its operations into seven business units in late 2001 under a reorganization thought up by chief executive Steve Ballmer.

The company's seven business units are: Client, which includes its Windows operating system; Information Worker, including Office business software applications; Server Platforms, for server software; Home and Entertainment, including Xbox video-game consoles and the Xbox Live online gaming service; MSN, its Internet service; Business Solutions, including software for small and medium sized businesses; and CE/Mobility, including software for wireless phones and mobile devices.

Only three units--Client, Information Worker, and Server Platforms--are profitable. The rest are collectively losing billions of dollars a year.

Meanwhile, another position--president--has been vacant since April 2002, when Richard Belluzzo resigned the post, just more than a year after taking over the No. 3 position and about three years after coming to Microsoft.

It wasn't the first time an outsider has had difficulty fitting in as Microsoft's president. James Towne, formerly of Tektronix, arrived in 1982 and left the following year. A former Boeing executive, Michael Hallman, came and left in less than two years. In the 1990s, Microsoft experimented with sharing presidential duties among several individuals.

Microsoft spokeswoman Stacy Drake declined to comment on whether the company had plans to hire another president.

Any search, if there is one, is "low-key," Rosoff said.

"The No. 3 position is very difficult for an outsider," said Rosoff. "You have to accept that (Microsoft Chairman) Bill (Gates) and Steve (Ballmer) are always going to be one and two and are going to be running the show until one of them retires."

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