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Smooth Operator

Behind every news-making Microsoft deal stands its soft-spoken, hard-bargaining CFO.

Maffei dismisses such speculation. “I wish I were that smart,” he says. Hindery declines to comment on it, noting only that both AT&T and Microsoft benefited from the deal.

Happily Challenged?

The fact that Maffei’s dealmaking efforts are so nuanced leads Hindery to suggest that Maffei is “eminently capable of being a CEO of a lot of things.” Indeed, press reports a few months ago suggested that Maffei was interested in running Road Runner, a high-speed cable-modem joint venture in which Microsoft invested a reported $425 million in June 1998. But when the company asked Microsoft founder, chairman, and CEO Bill Gates for permission to hire Maffei as its chief executive, it was turned down. Maffei reportedly then lobbied to be named head of Microsoft’s new consumer and commerce group, which encompasses the Internet business, and was disappointed that the job went to vice presidents Brad Chase and Jon DeVaan instead.

A company spokeswoman is quick to point out that Microsoft has since promoted him from vice president to senior vice president, named him to a new “business leadership” team, and given him the additional titles of head of procurement and real estate. But this may not be enough to keep him in the CFO spot for long. “There’s some truth to the Road Runner rumors,” says Hindery.

For his part, Maffei maintains he’s happy in his current job. “Most CFOs look to the idea of being a CEO or to run something at some point. That said, I’d be hard-pressed to think of a [better] job in finance or as a CFO. This is a great job, with tons of intellectual challenge.”

The transition to the new business model is weighty enough. Ideally, says Hensel, such a rental scheme would apply to consumers as well as to corporate customers. To win contracts at present, Microsoft often tailors terms to individual customers–another reason its revenue isn’t as predictable as Maffei would like. To reduce the volatility of Microsoft’s revenue, the new pricing structure “needs to be consistent,” says Hensel, but he contends it will be difficult to establish one that’s acceptable to all. Maffei says the company has begun testing standardized rental arrangements with small companies, but adds that it’s too early to judge their success.

The company’s recent reorganization may help, though it will be difficult for outsiders to tell. Microsoft president Steven A. Ballmer has realigned operating divisions to reflect groups of customers rather than products, a change Microsoft says is designed to stimulate innovation and streamline development. But the company will not alter its internal reporting system to reflect the new setup, according to Maffei.

He won’t say why, but it may be because he doesn’t want to run afoul of the SEC’s new disclosure requirements for business segments. Basically, these require companies to disclose in their financial statements the same information about their business segments that they report internally. And many CFOs don’t want to report their company’s results this way for competitive reasons (see “Sliced, Diced, and Still Obscure,” CFO, February 1998).

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