Microsoft stock sheds 4% after Windows boss departs

These days at Microsoft Corp., you cant take anything at Surface value.

The launch of Windows 8 and the Surface tablet in October was supposed to be a revolution for the company, with investors hoping to finally see some capital gains after a lost decade of stagnant share value. But signs of shaky foundations at the software company emerged Monday when Windows chief Steven Sinofsky announced his departure.

The news sent Microsofts shares down 4 per cent Tuesday, exacerbating the stocks poor performance since Surfaces Oct. 26 release. While the stock rose more than 8 per cent in the week and a half following the release, it has since lost that premium and more its now worth 2.8 per cent less than it was at Surfaces launch.

With Mr. Sinofsky gone, some analysts are growing concerned.

While the departure of Sinofsky is just one additional data point, it is a negative and further calls into question the early momentum of the Windows 8 ecosystem, Barclays Capital analyst Raimo Lenschow said in a research note late Monday.

Analyst Rick Sherlund of Nomura Equity Research said in a note that he believes Mr. Sinofskys departure would continue to weigh on Microsofts stock in the near term. We hold Sinofsky in high regard as a technical visionary and his ability to deliver complex products on a timely basis, Mr. Sherlund wrote.

Mr. Sinofskys success in the Windows division led many to speculate he would eventually take the CEO reins from Steve Ballmer. After finding success with the highly profitable Office software suite, Microsoft appointed Mr. Sinofsky head of its Windows division as the company sought to recover from the flop of Windows Vista. He led its successor, Windows 7, to success, and Microsoft hoped to one-up that victory by using Windows 8 to gain traction in the mobile computing sector, where the company has long fallen behind competitors, such as Apple Inc. and Google Inc.

By leaving, Mr. Sinofsky has drawn negative speculation not only of tension within Microsofts upper ranks, but also of the positioning of Windowss future within the brand.

[Mr.] Ballmers been a controversial CEO at best, and people were hoping there would be a succession plan, Michael Turits, an analyst with Raymond James & Associates. said in an interview. With the success of Office and Windows 7, [Mr.] Sinofsky was a rock star, he said.

With the visionary gone, Mr. Turits said, theres a concern whether Microsoft has a succession plan in place that will keep investors happy.

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Microsoft stock sheds 4% after Windows boss departs