Sinofsky’s departure drops MSFT’s market cap by $10 billion

While Steven Sinofsky may not have many fans in Microsoft, it seems Wall Street loved him.

In the wake of his departure Microsoft’s market cap took a $10 billion hit in early trading, recovering only somewhat during the course of the day.

Analyst Rick Sherlund, Nomura explained why:

We hold Sinofsky in high regard as a technical visionary and his ability to deliver complex products on a timely basis,” he writes. “Sinofsky had previously driven successful Office releases, and the turn-around of Windows 7 after Vista, and we are of the view that the move is a loss to Microsoft.

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We believe this also signals that Mr. Ballmer has no plans to turn over the reins as Microsoft’s CEO for the next several years, despite press speculation to the contrary. We think the move will weigh on the stock near-term. We don’t think the move is a reflection on the success of Windows 8 one-month after its release.”

John DiFucci, J.P. Morgan concurred, saying:

We do not yet know what Mr. Sinofsky’s surprising departure means for Windows 8, but we expect investors will question whether Windows 8 is having the success MSFT management envisioned. Whether Steve Ballmer & Co. has been judging the success of Windows 8 by initial sales of the Surface tablet or by some other measure is not clear to us,” he writes. “Mr. Sinofsky was not only the President of Windows, the most profitable single business of MSFT, but he was the executive most talked about to receive the baton from current CEO Steve Ballmer when the time comes for Mr. Ballmer to retire. While some might state the obvious that a company the size of MSFT does not revolve around one person, next to the CEO, the most important person at MSFT is arguably the President of the Windows Division. … Windows is not likely to lose its dominance within the enterprise anytime soon. However, Mr. Sinofsky’s departure is likely to raise questions about MSFT’s ability to gain meaningful share in the tablet market, which we believe was the main goal of Windows 8. We anticipate the overhang of a possibly disappointing Windows 8 launch to weigh on MSFT shares in the near term.”

Expressing the contrarian view, Michael Turits, Raymond James said:

“While investors will ask if Sinofsky’s departure is a negative sign for the Windows 8 launch, that seems unlikely given W8 launched just over two weeks ago,” he writes. “In fact with the launch done and developers now focused on the next product cycle, we believe this was viewed as the right time for a leadership transition. While respected for shipping product on time, we believe Sinofsky was not viewed as equally successful in managing relationships with other top executives, customers, partners and developers, and that these issues in the end blocked his path forward. There has also been speculation that Sinofsky did not manage the relationships well with hardware partners as Microsoft announced that it would be rolling out the Microsoft Surface tablet based on its own competing hardware and that it would offer a non-Intel(ARM-based) version of the OS. Post the W8 launch priorities are likely shifting from just delivering the software to managing developer and partner relationships and building the universe of applications across multiple devices that will likely be the key to the adoption and commercial success of Window 8, Windows Phone 8, and both Microsoft and partner hardware-requiring skill sets that again we believe were not viewed as Sinofsky’s strengths, including perhaps the need cited in the press release to ‘drive alignment across all Microsoft teams, and have more integrated and rapid development cycles for our offerings.’”

Microsoft opened down $1.22, or 4.3%, to $27, from the previous nights close,  trimming the company’s market cap by more than $10 billion, and at the time of writing is trading at $27.23, still 2.75% down from yesterday’s close.

Via Forbes.com

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  • Falcon_CMH

    No matter the fallout from this loss the Windows 8 platform, eco-system, and devices have the opportunity and are poised to overrun Android and Apple over the next few years with ease, Android being the tougher competitor worldwide like Sony is in the game market. So if this doesn’t happen then Ballmer will have dropped the ball. Whether this guy holds the keys to MS success in accomplishing this or was a clog in the pipe is yet to be seen but it still can be accomplished and possibly faster now. Although Wall street seems to have already formed an early opinion on that before any real results in practical form can be determined. Society will be watching closely and grading MS through the stock like they have been Apple doing so well and recently down quite a bit losing their top guy Jobs and for the lack of any real innovation in the past few years.

    • Bugbog

      As far as I’m concerned, full tablet Android (vs Windows 8) is DOA. Despite it just being two weeks after launch! :)

      For Smartphones and 7″ tablets, it will continue to gain/keep it’s marketshare lead.

      The interesting fight will be in seeing how much marketshare Apple’s iPad will be able to keep after a year of availability.

  • http://94octane.com Beezer

    I checked on my numbers earlier and man am I pissed. Today out of all days. Apples stock gained and microsofts dropped.

  • Emi Cyberschreiber

    This so sooo stupid…
    Sinofsky was important but…. he wasn’t that important. Julie was the brain behind Windows 8, so its not like she doesn’t know the path Microsoft is taking with Windows 8.
    all this stuff is so stupid. specially since this is better for Microsoft, Sinofsky was good, but alot of people always say it was hard to work with him, and it will be easier to work with Julie, so instead of damaging Microsoft divisions, Julie would help to make a better Microsoft. also its not like Windows was a 1 man show, still Microsoft has the same developers, a brain as Julie that worked for office and Windows. so even though it was a surprised a Little sad sinofsky left, to me its better without him. he have to wait of course, but its not like everything is lost in Microsoft without Sinofsky.

    • Bugbog

      Given that he was the face, and there was no pre-warning, then it’s fair that there should be some reaction to his departure. (It’s even made the BBC business headlines in the UK!)

  • YCSMD

    Today was the ex-dividend date. Look up why this matters.

  • http://josedmorales.net/ Joe Morales

    Please dear tech lords, whatever happens .. .don’t let this become another Vista fiasco!