Office man to exit Microsoft

Jeff Raikes, one of Microsoft's three division presidents and the executive most closely associated with its immensely profitable Office software, announced Thursday he will retire in September.

As president of the Microsoft Business Division, Raikes, 49, is responsible for products and services that netted the company $10.7 billion in fiscal 2007, more than half the year's operating profits.

Stephen Elop, a 44-year-old software-industry veteran, will join Microsoft at the end of the month to assume Raikes' responsibilities.

Recruited by now-Microsoft Chief Executive Steve Ballmer from Apple in 1981, Raikes was employee No. 105, as best he can recall.

He worked on the company's graphical-applications strategy in the 1980s and led strategy and design of the Office suite, a set of programs including Word and Excel that has gone on to earn Microsoft billions and is used by some 500 million people.

Raikes eventually led Microsoft's global sales and marketing organization.

In 1996, he joined the senior leadership team — at the time an eight-man group of top executives advising Chairman Bill Gates on strategy — and remains its longest-tenured member after Gates and Ballmer.

"Very few people have contributed more to Microsoft than Jeff," Ballmer said in an e-mail to employees Thursday.

In the past seven years, Raikes has focused on expanding Microsoft's business offerings and developing a generation of executives below him in the 80,000-employee company.

Raikes said he had discussed his exit with Ballmer "for some time," and they agreed he has accomplished those goals and the timing was right.

Office 2007, on the market since November 2006, is outpacing its predecessor.

During the first 10 full months, Office 2007 unit sales were up 137 percent compared with Office 2003, Chris Swenson, director of software-industry analysis at The NPD Group, said in an e-mail.

"[Raikes] was, without a doubt, one of the most effective executives working at Microsoft," Swenson said. "His track record with Microsoft Office ... speaks for itself."

Raikes said work is well under way on "Office 14," the successor to Office 2007. His division has been known for a more predictable schedule of software releases, while the last version of Microsoft's other big product, Windows, faced repeated delays.

"[Raikes] has accomplished a lot of what he set out to accomplish," said Rob Helm, director of research at Kirkland-based Directions on Microsoft. "He's done a good job of diversifying away from that Office-centric business."

Beyond Office, Microsoft has moved into unified communications, business intelligence and business applications such as customer-relationship management software — all of which have brought it into competition with more-established players in those areas.

Raikes will maintain his title of president and stay on the company's strategic leadership team as he hands off the business to Elop in the next nine months. It's a transition that will take place as Gates himself serves his final six months as a full-time Microsoft employee.

Analyst Sid Parakh of McAdams Wright Ragen has a positive view of the churn among Microsoft's senior leaders — another executive, Bruce Jaffe, head of mergers and acquisitions, is also departing — especially given that Raikes' replacement comes from outside Redmond.

"In a way, it's good to see that they want fresh leadership," Parakh said, noting that some Wall Street analysts have criticized the company for not having more turnover in the executive suites.

Raikes had been mentioned as a possible successor to Ballmer.

His broad expertise in product development and sales made him a "natural choice for CEO," said Helm, of Directions on Microsoft.

Raikes said he did not aspire to the top job.

"I don't have CEO envy," he said. "I like the kind of role that I play in the business. The key thing is Steve's a tremendous leader of our company and he's made it clear that he wants to be CEO here for many, many years — maybe 10 years or more — and I think that's great. I think that's the best thing for Microsoft."

Raikes hasn't decided on his post-Microsoft plans but said it would likely be outside the software industry.

"I have passions in a number of areas," he said, listing teaching, community service and philanthropy and agribusiness.

Raikes and his wife, Tricia, chaired the 2006-2007 fundraising campaign for United Way of King County. Their family foundation had more than $112 million in assets at the end of 2005, according to tax records.

Raikes has an ownership interest in the Seattle Mariners. And the Nebraska native's brother, outgoing Nebraska state Sen. Ron Raikes, still runs the family's farm.

"With corn at $4 a bushel, maybe I'll be an agribusiness tycoon," Jeff Raikes said.

He should have no trouble pursuing whatever he wants to do. Raikes had $6,182,567 in salary, bonus, stock awards and other compensation in the 12 months ended June 30.

He also owns more than 5.4 million shares of Microsoft stock, worth more than $186 million at Thursday's closing price of $34.33 a share.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com