Microsoft announces online shake-up

Johnson had been a driving force behind Microsoft's attempts to buy all or part of Yahoo; he leaves to join telecoms equipment maker, Juniper Networks.

The move comes at a critical juncture for Microsoft: it faces unprecedented challenges in its Windows business, while its online unit has never gained the traction Microsoft leaders crave.

"This new structure will give us more agility and focus in two very competitive arenas," said Steve Ballmer Microsoft chief executive.

Ballmer is to take a more hands-on role in running the Windows division.

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