By Daisuke Wakabayashi
SEATTLE (Reuters) - Microsoft Corp announced a management shake-up at its loss-making online division on Thursday, thrusting an outsider into a prominent position ahead of a proposed merger with Yahoo Inc.
Brian McAndrews, the former CEO of the aQuantive digital advertising company that Microsoft bought last year, will assume greater responsibilities at the company's online services unit, taking over much of the duties of division head Steve Berkowitz. He will leave Microsoft in August, the company said in a statement.
While Microsoft also promoted two other executives to senior jobs in the division, the reshuffle suggested to some that McAndrews, 47, will likely be in a top leadership position in the combined Microsoft-Yahoo, should the Web pioneer accept Microsoft's $41.8 billion buyout offer.
"If anyone is going to lead Microsoft out of its problems online, it's going to be McAndrews," said Matt Rosoff, analyst at independent research firm Directions on Microsoft. "He's the person who has the most experience in advertising and they are going to lean pretty heavily on him."
A Microsoft spokesman said the leadership changes were unrelated to the Yahoo negotiations, noting that seven other executives were also promoted to senior vice president.
A former ABC television executive, McAndrews is expected to play a central role in integrating Yahoo's advertising platform into Microsoft and creating a digital advertising powerhouse to rival Google Inc.
He ran aQuantive for seven years, developing relationships with advertising agencies, advertisers and Internet companies.
Yahoo has rejected Microsoft's unsolicited bid, saying the offer undervalues the company. Microsoft has said its offer is "full and fair," but analysts expect the company to sweeten its price to clinch a deal.
McAndrews and Microsoft Chief Software Architect Ray Ozzie are expected to play a lead role in the Redmond, Washington-based company's charm offensive to retain Yahoo staff if a deal gets done.
As executives who are not Microsoft lifers, the pair will try to encourage Yahoo employees to bury years of Silicon Valley animosity toward Microsoft and join forces to defeat a common enemy in Google.
A Microsoft employee, who declined to be identified, said McAndrews has got the "street cred" to get respect from not only Microsoft staff, but from Yahoo.
"He's not seen as a typical Microsoft executive, because he ran his own company. That will get him respect in both Redmond and Silicon Valley," said the Microsoft source.
Unlike a merger of companies with significant fixed assets, Yahoo's prime asset may be its people and their Web expertise. Retaining as much of its top talent as possible will be one of Microsoft's top priorities.
TWO OTHERS PROMOTED
Microsoft also promoted Satya Nadella and Bill Veghte to senior vice president positions.
Nadella will take a lead engineering role in the online division, while Veghte will take on a sales, marketing and strategy role in Windows and Microsoft's online properties. The reshuffle was first reported by CNET.
The Yahoo offer is Microsoft's latest attempt to overhaul its online services group. The division has not turned a profit in two years and has undergone a series of strategic shifts, but has done little to slow the rise of Google.
The 49-year-old outgoing division head, Berkowitz, a former Ask.com chief executive, was hired in May 2006 to implement changes at the division. But company insiders say he has had trouble navigating Microsoft's political power struggles. A Microsoft spokesman said Berkowitz was not available for comment.
Shortly after joining Microsoft, Berkowitz criticized the company in an interview with The New York Times, saying Microsoft had lost its way because it became too enamored with software wizardry instead of making a search engine people wanted to use.
In that same interview, Berkowitz also equated Microsoft to a cruise ship that was hard to redirect.
(Editing by Leslie Gevirtz, Gary Hill)
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