In April, Niall Kennedy of Technorati fame joined Microsoft “to create a new product team around syndication technologies such as RSS and Atom.” Things seemed not have worked out as he is leaving August 18 for his own startup. These things happen, but more interesting is what he has to say about how things are going with Windows Live:
The Windows Live initiative got off to a huge start, with lots of new services created and an “invest to win” strategy in the new division. There were so many new programs created and headcount opening up Microsoft told Wall Street it would be spending $2 billion more than anticipated in the short-term to cover these new costs including over 10,000 new hires over the last fiscal year.
The stock plummeted on the announcement Microsoft did not have its costs under control. Microsoft’s market cap lost close to $59 billion in the six weeks after I joined and second quarter financials were released, more than the GDP of Ecuador and over half the market cap of Google. What do you do when the market responds to your 6 month-old online services strategy by reducing your valuation by 1.5 Yahoos? Windows Live is under some heavy change, reorganization, pullback, and general paralysis and unfortunately my ability to perform, hire, and execute was completely frozen as well.
There’s more by following the link, but the impression that Microsoft gives of stiff arming the importuning Wall Streeters in order to invest in growth technologies doesn’t seem to be real clear to the troops.
Of course, I am exaggerating. Microsoft wouldn’t be doing share buybacks if they were completely oblivious to investors and maybe that’s the real problem. Going for both “guns and butter” is a famous recipe for getting neither.
Update 8/9: Todd Bishop reports the Microsoft response:
Responded Adam Sohn, a Microsoft spokesman, in a statement issued by the company: “We are not pulling back on the Live effort at all. We are totally committed and seeing great momentum across the company.”