Microsoft Watchers Comfortable with Maffei's Successor

Though the departure came as a surprise, John Connors is considered a strong replacement.
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SAN FRANCISCO -- While the resignation of Microsoft (MSFT) - Get Report CFO Greg Maffei caught many on Wall Street by surprise Wednesday, most Microsoft watchers feel confident that Maffei's relatively obscure successor will be up to the task.

To replace Maffei, Microsoft named John Connors as senior vice president of finance and administration and chief financial officer effective Jan. 7. Although not a high-profile presence in Redmond, Wash., some observers say Connors has been groomed to take over the CFO slot since joining Microsoft in 1989.

"I didn't think of John but John is an ideal candidate," says Rick Sherlund, an analyst with

Goldman Sachs

. "I think it will be a fairly seamless transition. This is more reflective of Greg's ambitions." Goldman, which has done underwriting for Microsoft, maintains a recommended-for-purchase rating on the company, its highest.

From 1994 to 1996 Connors, a certified public accountant, was corporate controller reporting to then-CFO Mike Brown. After gaining financial experience, Connors went on to acquire more operational skills, working as vice president and chief information officer. Most recently, Connors was vice president of the worldwide enterprise group, responsible for sales, service and relationship strategy for large, medium and small businesses.

But not everyone is convinced that Connors will shine as brightly as Maffei, who left Microsoft for the CEO position at

Worldwide Fiber

.

"I don't know how you replace Maffei," says Christopher Lord, senior analyst with

Pivotal Asset Management

. "He's one of the best of all time." Despite reports of other job offers Maffei had considered, many said they were surprised by Wednesday's announcement. "Wow," said Brian Salerno, an analyst with

Munder Capital

, a Microsoft investor. "I'm sure it's not going to be viewed positively but they have so many lieutenants there."

Microsoft shares fell 2 9/16 to 115 in after-hours trading after closing regular trading up 1 11/16.

Maffei has been considered to be in play ever since the

Wall Street Journal

first reported in April that

Road Runner

, a joint venture between cable giants

Time Warner

(TWX)

and

MediaOne

(UMG)

, had been trying to recruit Maffei as its CEO. Maffei, who gained a reputation as an imaginative dealmaker, never left because Microsoft Chairman

Bill Gates

vetoed the move. Gates acquired veto power over Road Runner's top slot after Microsoft bought a 10% stake in the cable modem provider in June for $213 million.

Based in Vancouver, Canada, Worldwide Fiber is a builder of fiber-optic telecommunications networks. It was created by

Ledcor Industries

, a telecommunications firm founded in 1947, but has operated as a separate subsidiary since May 1998. The company has built networks for

Bell Canada

and

AT&T Canada

, among other phone carriers. Worldwide Fiber may be bringing in Maffei to help take it public next year.

"We are considering an IPO in the first six months of 2000," says Worldwide Fiber spokeswoman Michelle Gagne.

Maffei has profited handsomely from working at Microsoft. The CFO recently sold stock worth $13.8 million, the first time he's sold shares since taking the job in 1997. In total, Maffei owns 1.71 million stock options; 1.14 million of those options are vested. If sold, those options would be worth around $130 million -- an enviable sum but far short of the billion-dollar paper gains being pulled down by the CEOs of today's leading Internet companies.

"Greg was very well liked on Wall Street," says Roger McNamee, partner with

Integral Partners

. "But I think he was ready to be an operating guy."

-- Silicon Valley columnist Adam Lashinsky contributed to this report.