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Originally published January 10, 2011 at 8:43 PM | Page modified January 11, 2011 at 8:11 PM

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Another top Microsoft exec heads for the door

Microsoft Chief Executive Steve Ballmer wrote in an e-mail distributed to all employees Monday morning that it was time for a change.

Seattle Times technology reporter

Key departures

Chris Liddell: The chief financial officer left Microsoft in November 2009 after four years and is now General Motors CFO. Peter Klein, CFO of Microsoft's Business division, was promoted to replace him.

Robbie Bach: The 22-year veteran and president of the Entertainment and Devices division, which makes Xbox and Windows Phone 7, retired in the fall. Senior vice presidents in the division were promoted to run two new businesses. Don Mattrick became president of Interactive Entertainment and Andrew Lees became president of Mobile Communications.

Stephen Elop: The president of the Microsoft Business division left to become chief executive of Nokia, the Finnish cellphone manufacturer, in September. He had been at Microsoft two years. Kurt DelBene, a senior vice president, was promoted into Elop's job.

Ray Ozzie: The chief software architect said in October he was retiring, after working at Microsoft five years. Microsoft said it will not fill Ozzie's position, previously held by Bill Gates.

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The exodus among the top ranks of Microsoft continues.

Bob Muglia, the president of the Redmond company's Server and Tools business, is leaving the company after 23 years. Microsoft Chief Executive Steve Ballmer wrote in an e-mail distributed to all employees Monday morning that it was time for a change.

"This is simply recognition that all businesses go through cycles and need new and different talent to manage through those cycles," Ballmer wrote. "Bob has been a phenomenal partner throughout this process, and he and his leadership team have the right strategy in place."

The departure surprised some observers, since the Server and Tools business has performed well. While not as big as the Windows and Office businesses, the division has grown into a $14.9 billion-a-year business that made $5.5 billion in operating profit in fiscal 2010.

"It did surprise me," said Rob Horwitz, co-founder and research chairman of Directions on Microsoft, an independent research firm in Kirkland. "He really did grow the third child — the first is, of course, Windows, and Office is the second child. This is one of the three really successful moneymaking businesses growing in low double digits every single year against some stiff competition like Oracle."

Microsoft declined to comment further on Muglia's departure.

In an e-mail Muglia sent to employees, first reported by ZDNet and confirmed by Microsoft, he said he would be moving to "new opportunities outside Microsoft" later this year. He also wrote about the importance of integrity.

"The foundation of who I am is based on living with integrity," Muglia wrote. "Integrity requires principles, and my primary principle is to focus on doing the right thing, as best I can. The best thing, to the best of my ability, for our customers, our products, our shareholders, and of course, our people."

The Server and Tools division makes corporate infrastructure software such as Windows Server, SQL Server and virtualization software.

In the past 12 months, it has risen to a new level of prominence with Microsoft's push to build a cloud-computing business with services that allows companies to store computer data and software remotely. Cloud computing is a bet-the-company move for Microsoft, and the Server and Tools business makes Azure its cloud platform.

The division has built several products and features for Azure to give businesses many options to move part or all of their business to the cloud. After launching last January, Azure has 20,000 customers.

Microsoft will do an internal and external search to replace Muglia, Ballmer wrote in his e-mail. In the meantime, Muglia plans to continue running the server division until the summer.

His decision is one of several in a string of high-profile departures at Microsoft and at a time when Wall Street is pressuring the company to boost its stock price and some have criticized Ballmer's leadership.

In September, Stephen Elop, head of the Microsoft Business division, left to become chief executive of Nokia. Kurt DelBene, a senior vice president, was promoted into Elop's job.

Robbie Bach, the president of the Entertainment and Devices division and a 22-year veteran of Microsoft, said in May he was retiring in the fall. His two lieutenants were promoted to two new positions.

Andrew Lees became president of Mobile Communications, and Don Mattrick became president of Interactive Entertainment. Bach's position was not filled.

Ray Ozzie, chief software architect, said he was leaving in October, and the company does not plan to replace him.

Chris Liddell, the chief financial officer, left in November 2009 and was replaced by Peter Klein, then chief financial officer of the Microsoft Business division.

Ballmer, 54, has said Microsoft is doing succession planning, but it's unclear who is being groomed to become the next CEO of the giant software company.

The incumbent division presidents who remain with Microsoft are Craig Mundie, chief research and strategy officer; Qi Lu, head of Online Services; and Steve Sinofsky, president of the Windows group. Sinofsky, 45, is the youngest of the division presidents.

Muglia joined Microsoft in 1988 as a program manager for SQL Server, then worked on Windows NT. He managed the Office group, then worked on .NET.

Muglia testified on behalf of Microsoft during the U.S. antitrust trial in the late 1990s; he later was in charge of complying with documentation requirements that were part of the settlement.

Muglia also worked on Passport, a Microsoft move to offer online services it later pulled back from.

He joined the Server and Tools group in 2003 and rose to the position of division president in January 2009.

"He is a really good guy, and he's very well-respected internally," Horwitz said. "He's always fair, very customer-focused, really listens to customers and takes it to heart. He's not afraid to admit if he's failed. It's a great loss."

The senior vice presidents who reported to Muglia are Amithab Srivastava, head of the server and cloud business; S. Somasegar, head of the developer division; and Ted Kummert, head of the business platform.

Microsoft stock fell 1.3 percent Monday, closing at $28.22. The Nasdaq was up slightly, 0.17 percent.

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com

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