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Microsoft CFO leaves for start-up

Greg Maffei will resign, effective Jan. 7, to accept a position with Worldwide Fiber, a privately held firm that specializes in building fiber optic networks.

Microsoft chief financial officer Greg Maffei has resigned to become chief executive of Worldwide Fiber, a privately held firm that specializes in building fiber optic networks.

The software giant today said that the resignation is effective Jan. 7 and that Maffei will be replaced by John Connors. Connors has been with the company 11 years and is currently the vice president of the worldwide enterprise group.

"Greg's contributions have been outstanding," Microsoft chief operating officer Bob Herbold said in a statement. "His strong financial management abilities have helped Microsoft's finance organization to be recognized as world-class."

Connors brings a vast range of experience to the position of CFO. In his first year as chief information officer he trimmed $58 million off Microsoft's technology budget by improving efficiency. He also streamlined how Microsoft negotiates contracts.

Microsoft's worldwide enterprise group will temporarily report to Jeff Raikes.

Maffei's resignation was announced on the same day the software giant's market capitalization surpassed $600 billion. The company's stock has risen steadily in recent days on optimism over Windows 2000, the company's new operating system for businesses that will be released next year.

Shares of Redmond, Wash.-based Microsoft dipped in after-hours trading to 115.

Maffei has been widely recruited in the technology industry this year. Senior positions at Time Warner's Road Runner unit, which provides high-speed bandwidth services, and Apple Computer were among the positions for which he was considered a potential candidate.

His departure from Microsoft could have been inspired by a need to find a new challenge, said analysts.

"It seems that he has gotten bored with his job, become [rich] and went looking for other opportunities. A person at that level would be racking up stock options like crazy," said Technology Business Research analyst Jim Garden.

"We are very excited to have Greg on board," David Lede, chairman of Worldwide Fiber, said in a statement. "We were looking for a leading executive and an established deal-maker who understands the convergence of software applications, the Internet and telecommunications."

In the same statement, Maffei said, "This is a great opportunity. Worldwide Fiber is very well-positioned to capitalize on the amazing growth in Internet and data traffic. It is well funded with abundant international assets and a very strong management team."

Vancouver-based Worldwide Fiber provides high-speed fiber-optic network products and services to telephone companies and ISPs. The company is constructing a 22,000-mile fiber-optic network in North America. The company also recently announced deals with Qwest and Williams Communications.

Formerly a division of Ledcor Industries, a Canadian construction firm, Worldwide Fiber was spun out as an independent company in 1998.

Maffei leaves some accounting practices behind that his successor will have to deal with, analysts said.

"A lot of companies get in trouble for recognizing revenue that didn't happen," Garden said. "In this case, they're on the other side of the fence for not recognizing revenue for some of their products. In essence, they're putting away revenue for a rainy day. In essence, the business has been even better than they have reported."

While there is nothing illegal about the practice, the Securities and Exchange Commission has been "on Microsoft because the amount is so large, around $4 billion," Garden said.

Microsoft could justify having an "unrecognized revenue" section on its balance sheet because of upgrade offers for Office 2000 and other products that customers could redeem in the future, analysts said.

Before taking over as CIO, Connors was Microsoft's controller for two years, making him responsible for producing the company's quarterly financial results and working with financial analysts.

Among other decisions, he ended the company's in-house development of software for internal use, opting to buy off-the-shelf packages. He also streamlined procurement, saving enough on $4 billion in purchase goods in 1998 to pay for a worldwide SAP roll out.

Microsoft president Steve Ballmer said Connors "has been a key member of Microsoft's senior management team for many years and now steps into the CFO role with a strong track record in financial management, information technologies, sales and marketing, and customer service."

CNET News.com's Joe Wilcox and Scott Ard contributed to this report.