Can Microsoft Bosses Play Well With Others?

Douglas is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

The latest news rocking the tech world has been the dismissal of Steven Sinofsky as the head of Microsoft’s (NASDAQ: MSFT) Windows division. The company, whose stock has sold off by nearly 5% on the news, cited the ousted executive’s inability to get along with his peers or cooperate with upper-level mandates as the primary motivation for the move. While the long-term impact of the shakeup remains somewhat unclear, there is near universal agreement that the timing – just after the release of Windows 8 and the Surface tablet – is both strange and unfortunate. Looking forward, the question now becomes one of determining if the sell off is a buying opportunity or a harbinger of bad things to come.

Ousting the Grouse

Mr. Sinofsky joined Microsoft in 1989, but became a bigger player after taking over the Windows division after Vista proved to be a flop. Despite his successes, Mr. Sinofsky earned himself a poor reputation within the company, having tussled with executives including Ray Ozzie, the Chief Software Architect who abruptly left the company in 2010, and Steve Ballmer himself. A recent report from Bloomberg cites “people, who asked not to be identified because they’re not authorized to speak publicly about it,” as saying that Ballmer temporarily tolerated the friction in order to bring the latest iteration to market, but felt it was time for a change.

If we look beyond the obviously dubious nature of these sources, the fact remains that the conflicts must have been severe for Mr. Ballmer to risk casting a pall on the new product launches by making a change at this time. Additionally, the fairly uniform basis for the dismissal making its way through the chatter-sphere, suggests that it is an accurate conclusion.

Two Atlases Shrugged

The dismissal of Mr. Sinofsky feels uncomfortably similar to the recent ousting of Scott Forstall from Apple (NASDAQ: AAPL). Mr. Forstall apparently had similar difficultly cooperating and collaborating with fellow senior executives at Apple, although his behavior seems to have stopped short of refusing to reveal details of a new product to the company CEO – Mr. Sinofsky apparently elected to keep major components of the new Surface tablet a secret until he deemed them ready to be viewed. Such behavior is not well received in corporate environments, especially those that rely on product cross-integration, like at Apple and Microsoft.

With two major players leaving two major firms under such hushed circumstances and in such close proximity, it is hard not to think of Ayn Rand’s classic Atlas Shrugged and the executives who left their posts to join the mysterious John Galt. While the parallels are certainly coincidental, they signal that a potential shift may be underway at both Apple and Microsoft to adapt to the losses. If, however, executives at Amazon, Google and IBM start to quietly exit, then it may be time to start considering more sinister plot developments – sarcasm served while you wait.

The Way Forward

There are several ways to see this latest development out of Microsoft, and while some may seem to compete with one another, they are not mutually exclusive. In the short-term, the departure of the individual largely responsible for the company’s two most critical products, especially before either has been proven, is a negative. It will likely lead to the type of volatility that the stock has already shown since the news became public. Given Mr. Sinofsky’s penchant for secrecy and a lack of disclosure, one must wonder if not having him at the helm of the division to address bugs and glitches will, at best, cause delays in those issues being corrected. Time will tell.

Over the medium and longer-term, putting together and maintaining a cohesive and cooperative team is critical. Particularly at a time when Microsoft is struggling to become relevant again, management can ill afford dramatic problems amongst its personnel. The fact that making a chance at this point in the process raises so many questions suggests that the problem was likely fairly severe and festering for some time. Unfortunately, the ultimate answer here as well is, “time will tell.”

The Trade

While I believe that it is fairly important for Microsoft to function cleanly in order to compete, I do not see the company’s turnaround as being dramatic or sudden. Microsoft is playing to its strengths and rather than trying to launch an Apple-esque reversal, it is seeking to lumber steadily towards renewed growth and dominance. Given this path, and my belief that it will ultimately succeed in re-emerging as a leader in technology, I see current weakness as a buying opportunity.


Mr. Ehrman has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple and Microsoft. Motley Fool newsletter services recommend Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.

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