Microsoft reshuffles company structure

Microsoft on Thursday overhauled its organizational chart in a bid to

speed the pace of innovation at the software giant.



The reorganization, outlined in a memo by CEO Steve Ballmer to

employees, underscores a Microsoft refocusing on collaboration around

disciplines and engineering areas to move faster.



"The time frame for product releases, customer interactions and

competitive responses are dramatically shorter than ever before,"

Ballmer said on a conference call, about the company's effort to

become more nimble.



The move comes as the company faces a worldwide downturn in PC buyers.

Microsoft is also struggling to gain traction in mobile devices and

services that keep pace with the likes of Apple and Google.



Shares of Microsoft rose 2.8% to $35.69 on Thursday following the

reorganization news.



Ballmer in effect jettisoned the longstanding divisional hierarchy

that took shape under his mentor, company co-founder Bill Gates.

Certain business functions, including finance, marketing and business

development, will move out of separate divisions and into their own

company-wide groups with overarching senior executives.



The reorganization shifts Microsoft away from a structure centered on

products toward a strategy aimed at how its devices function, says

Forrester analyst Frank Gillett.



"You have a substantially different Microsoft than what we had

yesterday," he says.



Microsoft still continues to rake in huge profits from software

licenses sold to businesses for its Windows PC and server operating

system, and Office software suite. But researchers Gartner and IDC on

Wednesday reported that worldwide PC shipments sank 11% in the second

quarter, the fifth-straight such quarterly decline.



EXECUTIVE SHUFFLE



Terry Myerson, who now heads up Windows Phone, will be the executive

vice president for operating system engineering, overseeing Windows,

Windows Phone and the Xbox operating system.



Satya Nadella, chief of Microsoft's server and tools group, has been

named executive vice president for cloud and enterprise engineering,

adding oversight of the company's data center network, known as Global

Foundation Services, to his responsibilities.



Julie Larson-Green, head of Windows engineering, will rise to

executive vice president of devices and studio engineering, including

the Microsoft Surface tablet, the Xbox hardware and mice and

keyboards.



And Qi Lu, chief of Bing and online services, will become executive

vice president of apps and services engineering, adding most of

Microsoft Office plus Skype, the Lync communications service and the

Yammer business social network.



Notably, Kurt DelBene, president of the Microsoft Office Division,

will be retiring, and Rick Rashid, the longtime Microsoft Research

chief, will "move into a new role driving core OS innovation in our

operating systems group," according to Ballmer's memo.



Last week, Xbox chief Don Mattrick, announced his departure to become

CEO of game maker Zynga.



Bill Smead, CEO of Smead Capital Management, said that Microsoft's

share price has languished for more than a decade. Last year, Smead

Capital divested a large block of Microsoft shares, which it had held

for years.



"Vision has been missing, and no amount of reshuffling can make up for

a lack of vision," says Smead. "Without a vision and a cause,

reshuffling just buys time."