Microsoft CFO Greg Maffei quits

Microsoft (Nasdaq: MSFT) said former corporate controller John Connors will take over as head bean counter.

Microsoft shares closed up 1 11/16 to 117 9/16 ahead of the announcement but fell more than $3 a share in after-hours trading.

In its release, Microsoft said Connors, an 11-year Microsoft veteran, will take the reins on Jan. 7.

"Greg's contributions have been outstanding across the spectrum of numerous deal negotiations, in achieving excellence in the treasury management area, and in guiding an outstanding internal and external management reporting team," said COO Bob Herbold in a prepared release.

"His strong financial management abilities have helped Microsoft's finance organization to be recognized as world-class. We wish him the best in his next endeavors."

The Belluzzo factor?
Analysts following Microsoft throughout Maffei's tenure said they weren't surprised to hear that Maffei was moving on.

"It's not a total surprise," said Andrew Roskill, an analyst at Warburg Dillon Read. "There's been speculation about him leaving for some time now. Bringing on (Rick) Belluzzo to run its Internet business may have forced his hand."

Belluzzo, formerly of SGI (NYSE: SGI), was hired in August to head up Microsoft's much-ballyhooed Internet operations.

"(Maffei's departure) is negative news," said Laura Lederman, an analyst at William Blair & Co. "It's not surprising considering some of the huge job offers he'd been receiving. There were also a lot of rumors of friction between he and Bill Gates."

Analysts said Microsoft will miss Maffei's outstanding negotiating abilities as well as his refreshing candor and availability to both the press and the financial institutions.

"He's exceptional at communicating with the Street," Roskill said. "He was very approachable and open."

Connors an unknown
While it's difficult to measure what if any impact Maffei's departure will have on Microsoft down the road, Roskill said Maffei also benefited from Microsoft's incredible growth and technological innovations.

"Microsoft was an extremely well-oiled machine long before he got the reins," Roskill said. "He did a fine job but it was a good situation to walk into. Connors, he's somewhat of an unknown."

Connors most recently held the position of vice president of the worldwide enterprise group, responsible for the sales, services and relationship strategy for large, medium and small businesses across all industries. Prior to that, Connors was vice president and chief information officer overseeing worldwide internal technologies infrastructure, corporate information and key internal systems.

From 1994 to 1996, he held the position of corporate controller reporting to then-CFO Mike Brown, where he was responsible for worldwide accounting, forecasting, and fiscal planning processes and organizations. Before that, Connors was general manager of worldwide financial operations. He joined Microsoft in 1989 and is a CPA.

Microsoft easily topped analysts' estimates in its first quarter, raking in $2.19 billion, or 38 cents a share, on sales of $5.38 billion.

Though Maffei sounded his usual notes of caution, he was upbeat about the second quarter, he predicted sequential revenue growth of about $750 million, which translates into an increase of almost 14 percent from the first quarter.

First Call consensus expects Microsoft to earn 42 cents a share in its second quarter and $1.64 a share in the fiscal year.

Its shares peaked at 117 1/8 earlier this week after falling to a 52-week low of 68 in December.