By Shira Ovide and Chelsey Dulaney
Microsoft Corp. CEO Satya Nadella continues to put his stamp on
the company, announcing Wednesday an executive shuffle that
involves the departure of former Nokia Corp. chief Stephen
Elop.
Mr. Elop was the biggest surprise departure in the executive
shuffle. Two other Microsoft executives, Kirill Tatarinov and Eric
Rudder, will, like Mr. Elop "leave Microsoft after a designated
transition period," the company said in a news release. Separately,
Mark Penn, who had served in a senior strategist role, is leaving
Microsoft as well.
The departure of Mr. Elop along with one of his closest
deputies, Jo Harlow, is the latest sign Microsoft is hitting the
reset button on its struggling smartphone hardware business. The
more than $9 billion purchase of Nokia's handset business--a deal
struck by Mr. Nadella's predecessor Steve Ballmer in late 2013--was
supposed to make Microsoft a relevant player in smartphones.
Microsoft declined to make Mr. Elop available for an
interview.
Instead, under Mr. Elop's leadership at Microsoft, the company's
Windows smartphones lost market share and bled red ink. The company
recently said it planned to further cut costs at the smartphone
business and other hardware units. Nokia already was targeted for
thousands of job cuts in the biggest layoffs in Microsoft's
history, announced last year.
Last July, in an email that rankled some with an introduction of
"Hello there," Mr. Elop outlined thousands of job cuts and
underlined the challenges the unit was facing.
"It is particularly important to recognize that the role of
phones within Microsoft is different than it was within Nokia," he
wrote. "Our device strategy must reflect Microsoft's strategy and
must be accomplished within an appropriate financial envelope.
Therefore, we plan to make some changes."
Mr. Elop had been viewed as a potential successor to Mr.
Ballmer, and his return to the company was seen as setting the
table for him to win respect in Microsoft's board room as directors
searched for a new CEO. In February 2014, Mr. Nadella was appointed
to the job.
Daniel Ives, an analyst with FBR Capital Markets, said Mr.
Elop's exit "speaks to Microsoft's view that Nokia and the overall
mobile strategy was clearly not heading down the right path."
Mr. Ives also said he expected Microsoft to write down the value
of the former Nokia handset business in the coming year.
A spokesman for Microsoft said there is no change to company's
commitment to its smartphones and other hardware businesses. He
declined to comment on the subject of a possible Nokia write
down.
Microsoft's hardware devices businesses, which Mr. Elop ran,
will be folded into a new division with Microsoft's operating
systems group led by Terry Myerson. He has been accumulating
responsibilities and now oversees a string of important Microsoft
businesses including Windows, smartphones, the Xbox videogame
system and the Surface tablet-style computers.
Write to Shira Ovide at shira.ovide@wsj.com and Chelsey Dulaney
at Chelsey.Dulaney@wsj.com
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