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Why Sinofsky Left Microsoft (Nasdaq: MSFT)

By , Contributing Writer, Money Morning •

It hasn't even been three weeks since the hugely hyped release of Windows 8, and Windows division president Steven Sinofsky has left Microsoft Corp. (Nasdaq: MSFT).

The abrupt departure has many questioning the success of Windows 8, Sinofsky's relationship with Microsoft CEO Steve Ballmer, and the evolution of the software giant.

"It is a little surprising to see a departure of someone at this level in charge of so many products with such immediacy, with no transition period. Microsoft is going to enter another period of management transition," Michael Gartenberg, an analyst at Gartner Inc. told Bloomberg News.

During his tenure at Microsoft, Sinofsky won accolades for leading intricate software projects and making sure they were delivered on time.

It had been widely speculated that Sinofsky, a 23-year Microsoft veteran, would take the reins when Ballmer stepped down.

But according to insiders, Sinofsky and Ballmer didn't always see eye-to-eye.

Sinofsky at MSFT

While Sinofsky's sudden exit is surprising, there seems to be no love lost.

"He has been known for making decisions that are controversial internally at Microsoft. Some of it was probably unnecessary," Al Hilwa, an analyst with market research firm IDC told The Wall Street Journal.

Sinofsky's failure to work in partnership with higher ups, and his well-known trait of ostracizing employees, made him an unlikely candidate for CEO. He was known as alienating some employees and executives, and never quite effectively connecting with critical Microsoft partners and hardware makers.

Dieter Bohn at The Verge said the answer to Sinofsky's departure is not in product performance, but lies solely with his inability to work well with others.

"Critically, Sinofsky was not ousted because of any issues with the launch of Windows 8 or the Surface, sources tellus; in fact, it's possible that his departure was already planned, but his ability to execute on Windows 8's retail release was seen as an asset worth keeping him around long enough to see it through," wrote Bohn.

"But his attitude (and skill set) as an aggressive, tightly-siloed Windows boss - not a holistic Microsoft boss - may have done him in," Bohn continued. "Given that the future of Microsoft's ecosystem would require tight collaboration between disparate divisions, Sinofsky's future path as an executive at Microsoft was essentially at an end."

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New MSFT Management Team

The management shift underscores Ballmer's urgency to keep up with rivals like Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG) and Facebook (Nasdaq: FB). Ballmer needs to keep his Microsoft troops' imaginative drives humming, while also keeping them productive and happy.

Ballmer is already aligning a new team to start on the next upgrade, a source familiar with the situation told Bloomberg.

In a letter to employees, also posted on the technology site The Verge, Ballmer wrote, "We are facing a time of great opportunity. What we have accomplished over the past few years is nothing short of amazing, and I know we have more amazing in us. I am excited about our people, and I am energized by the ability to change and grow, and I look forward to the success which lies ahead."

Julie Larson-Green, an engineering executive who worked with Sinofsky in two different divisions at Microsoft, and Tami Reller, the Windows division marketing chief and chief financial officer, will take over Sinofsky's former role.

Larson-Green, known for her ability to unite executives and get people to work together, will spearhead the engineering side, while Reller will oversee the business side.

Ballmer said in his statement regarding Larson-Green, "Her unique product and innovation perspective and proven ability to effectively collaborate and drive a cross company agenda will serve us well as she takes on this new leadership role. All of the current Windows engineering teams will report to Julie, and Julie will report to me."

Investing in Microsoft (Nasdaq: MSFT)

Having a more amicable working environment is certain to stoke the creative juices at Microsoft and spark further innovation.

Microsoft, once at the forefront of invention and technology, has garnered a somewhat stodgy reputation over the years. That is exactly what Ballmer is working on correcting.

On Monday, the company unveiled a universal speech translator. While still in the prototype stage, the product has attracted a lot of buzz and has thrust Microsoft once again into the pioneering spotlight.

A high flying stock during the Internet boom, shares of MSFT have returned to earth and are currently regarded as more of a dividend and blue-chip play than a growth investment.

Shares dropped following word Sinofsky left Microsoft and were trading down more than 3% in mid-morning Tuesday at $27.09, a good way off its 52-week high of $32.95.

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