William H. Gates, chairman of Microsoft Corp. and the world's wealthiest computer programmer, said yesterday that he was dismissing Michael R. Hallman, the president he selected two years ago.
Mr. Gates, a brilliant and demanding boss known for bombarding employees with electronic mail at all hours of the night, said that Mr. Hallman did not measure up.
"He was doing a lot of the parts of the job well," Mr. Gates said in a telephone interview. "But as we were thinking through new strategy, I wasn't satisfied that he was the right person for the job."
Mr. Hallman, 46, will be replaced with a three-member office of the president in a reorganization that Mr. Gates hopes will further his vision of putting a computer on every desk and in every home.
Mr. Hallman, who will leave March 1, defended his tenure and said yesterday that he was disappointed to be leaving.
"I've been at Microsoft for two years, and the company has doubled in size," he said in a telephone interview. "Bill and I have a good relationship, but this is a complex business to manage. There is no personal factor."
Mr. Gates said that he had been thinking for some time about the changes announced yesterday but that the decision to ask for Mr. Hallman's resignation came at a Saturday meeting of Microsoft's board.
Microsoft's stock shot up $4.75 yesterday, to $125, in over-the-counter trading. Friday, it plummeted $3.50 based on rumors of impending changes.
Microsoft, with more than 100 million customers around the world for its MS-DOS operating system, had revenues of $2.3 billion last year.
Operating software such as MS-DOS controls a computer's basic functions. Applications software includes word processing, spreadsheets and data sorting.
Microsoft's presidency will be shared by three longtime employees who have thrived under the 36-year-old Mr. Gates. They are Michael J. Maples, a former International Business Machines Corp. software strategist who has been the head of Microsoft's applications software business since 1988; Steven A. Ballmer, a Harvard University classmate of Mr. Gates who is head of Microsoft's operating system business; and Francis J. Gaudette, who will remain the chief financial officer.
The new organization marks a switch from the company's past searches for what Mr. Ballmer called "white knight" outsiders to fill the role of president.
"The choice of Maples, me and Gaudette is a fairly obvious one for people who know the company," Mr. Ballmer said.
Mr. Gates said the new three-man presidency will assume much of the responsibility for running the business, freeing him to conceive of new products and plan.
He used Microsoft's own brand of jargon to single out Mr. Ballmer as someone who had his utmost trust. "I have a high-bandwidth relation with Steve," Mr. Gates said.