Shake-Up At Top At Microsoft -- President Out In Reshuffle Of World's Leading Software Firm

Microsoft Corp. announced a major reorganization of its top management group today, including the resignation of President Michael Hallman and the promotion of three others to a new Office of the President.

Three senior vice presidents - Steve Ballmer, Francis Gaudette and Mike Maples - were named executive vice presidents, a new title in the company. Responsibilities under those executives were restructured.

Microsoft, located in Redmond, is the world's largest maker of software for personal computers.

Hallman's resignation is effective March 1. He remains as a consultant to the company through June 1.

In an interview this morning, Hallman said he was sad to leave the company but Microsoft had to reorganize in order to position itself for continued growth.

He said that growth of the company had made duties of the president too big for one person. The new structure calls for three people doing the job and will allow Chairman Bill Gates to focus on the software industry and other issues, Hallman said. Gates was unavailable for comment.

Hallman said none of these changes were a result of pressure from the Federal Trade Commission, which has been investigating the company's competitive practices.

Critics have said that Microsoft has used its dominance in the sales of systems software to gain advantages in the market for applications. Systems software controls the basic functions of a personal computer, while applications perform specific tasks such as word processing.

Microsoft's stock rose $1.25 per share today to $121.50 in early trading.

Hallman's departure raised questions about his relationship with Gates, a strong-willed manager whose influence is directly felt throughout the company. Maples said the two were friends, although there was some "cultural differences" between Gates and Hallman as a relative newcomer.

Maples said that Hallman's departure was amicable.

Securities analysts who follow Microsoft say Hallman's departure re-emphasizes the notion that Gates remains in charge.

"The other reality of Microsoft is Bill Gates runs the company," said Bill Whitlow of Pacific Crest Securities in Seattle. "At most companies, the president might be in charge of day-to-day operations and the chairman would be a step removed. But I don't think that's the case at Microsoft. Bill Gates is an active CEO."

Microsoft in the past 10 years has under gone several changes at the No. 2 position.

"Hallman had had fairly significant position at Boeing. He was a fairly young guy when he took the job, 43 or 44," Whitlow said. "What can you say. It just didn't work out. It just probably was not a good fit.

"It's probably a tough position in that Bill Gates runs the company. There are probably opportunities for conflict between president and chairman."

Quick changes at or near the top also demonstrate Microsoft's eagerness not to remain stationary, said David Rothschild, an analyst with Piper, Jaffray & Hopwood in Minneapolis.

"It impresses the hell out of me when company has grown the way they've grown and still has revolutionary thoughts," Rothschild said. "The core leadership is still intact. For Maples and Ballmer and Gaudette, it's a promotion. I don't believe that this change will have any material impact on Microsoft's leadership in the software industry."

Rothschild said that below Gates, parts become more interchangeable.

"It takes very unusual person to succeed at Microsoft," Rothschild said.

Under the restructuring, the three executive vice presidents will report directly to Gates. Maples, 49, will be in charge of a called division Worldwide Products Group. Ballmer, 35, will head Worldwide Sales and Support Group and Gaudette, 56, will headsWorldwide Operations Group.

The scheduled departure of Hallman is the latest of several changes in top management. Scott Oki, senior vice president for U.S. Sales, Marketing and Service, announced he was leaving to spend more time with his family and a nonprofit blanket-making venture he hopes to start. He was replaced by Jeff Raikes, formerly vice president.

Min Yee, vice president, publisher of Microsoft Press and head of the company's multimedia division, took a medical leave. At the same time, Fred Gray, general manager of Microsoft's languages business unit, left on a vacation after the company announced he was "no longer running" the 100-person group but continued to be employed by the company.

During Hallman's tenure, Microsoft has doubled revenues and grown from 5,200 employees to 10,000 employees.