Today Hot Report

Microsoft revealed its disarray in the aftermath of its failed bid for Yahoo on Wednesday, announcing a major reorganisation and the unexpected departure of the executive who oversaw its offer.

The company said Kevin Johnson, a 16-year veteran and one of three divisional presidents under chief executive Steve Ballmer, was leaving the company and his Platform and Services division was being split in two.

The new groups would be Windows/Windows Live and Online Services, with both reporting directly to Mr Ballmer.

A person close to Microsoft said there had been some tension between the chief executive and Mr Johnson, his right-hand man, particularly over the timing of his leaving and its impact on the major changes being made to the management of the company.

According to this person, Mr Johnson’s abrupt departure partly reflected Microsoft’s lack of progress in its online business - lying a poor third to Google and Yahoo - the failure of its bid for Yahoo and the debacle over the marketing of its Windows Vista operating system over the last year.

Mr Johnson himself was said to have become frustrated at the situation. The person added that one reason for his departure had been his ambition to become chief executive of another company.

He will be staying for a few weeks to help with the transition, but is understood to have accepted a senior position at Juniper Networks. The network equipment maker has yet to fill a vacant post of chief operating officer.

Mr Ballmer officially paid tribute to Mr Johnson on Wednesday.

“Kevin has built a supremely talented organisation and laid the foundation for the future success of Windows and our Online Services Business,” he said.

The chief executive insisted that the Windows business was ”firing on all cylinders”.

“We see tremendous opportunity in search and advertising, and we have a clear strategy for investing in success today and growth in the future,” he added.

Mr Johnson said: “I have been so fortunate to have experienced 16 amazing years of building Microsoft’s business.”

The executive had been head of the division since 2005. He launched Windows Vista and has been growing Microsoft’s software and services business, including completing more than 30 acquisitions.

However, businesses have been slow to upgrade from Windows XP to Vista and Microsoft’s online business has been loss-making. The chance to gain market share and close the gap with Google was lost in May when Microsoft abandoned its bid for Yahoo.