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June 25, 2013

Ballmer to Implement Major Restructuring Plan By July 1: Sources

Microsoft CEO Steve Ballmer’s rumored restructuring plan is reportedly set to take effect by July 1 in a bid to give the software company a more competitive edge against top rivals such as Apple, Google and Samsung.

Sources “close to the situation” told All Things D that Ballmer is planning sweeping changes and few of the top executives at the company are privy to the details.

The sources said Ballmer is working with “a small group of his direct reports” and some members of the board.

With so many senior executives left out of the loop, many are nervous — both about the plans for the company and about job security.

“It feels like it is going to be titanic — that Steve is doing this change for his legacy,” a “person close to the situation” was quoted by All Things D. “And it’s the first time in a long time that it feels like that there will be some major shifts, including some departures.”

Steve Ballmer

Steve Ballmer

It has been rumored for the past few months that Ballmer intends to turn Microsoft into a “devices and services” firm.

Sources “close to the situation” told All Things D the restructuring will mean promotions for several executives such as servers and tools division president Satya Nadella, Skype communications division president Tony Bates and Don Mattrick, president of the interactive entertainment division. It is thought that the change is not just a bid to simplify the company’s management team, but to rearrange some of the business’ units under new divisions.

News of the rumored restructuring likely goes hand-in-hand with growing investor pressure on Microsoft — stocks have risen 31 percent this year, an indication that stockholders sense some big, lucrative changes are just around the bend.

ValueAct Capital Management, within the past few months, has taken a $2-billion stake in Microsoft, also an indication that the activist investor is expecting big things from Microsoft. ValueAct Capital CEO Jeffrey Ubben recently hinted that Microsoft could become the world leader in cloud computing, adding that with the right push Office could become the firm’s most profitable product.

Nomura Equity Research analyst and Microsoft expert Rick Sherlund wrote in a note last week there could be “a shift in the wind upcoming for Microsoft, with shareholders potentially demanding a greater say in the direction of the company and how it might be run to drive a better return to shareholders.”

Sherlund said in his note Microsoft would be wise to sell its Bing search business and its Xbox gaming unit.