Microsoft today announced that the Platforms & Services Division (PSD) will be split into two groups: Windows/Windows Live and Online Services, with both groups reporting directly to CEO Steve Ballmer.

Microsoft also announced that PSD President Kevin Johnson will be leaving the company. Johnson will work to ensure a smooth transition. Johnson's departure is the latest hurdle to a possible transaction between Yahoo and Microsoft, a few days after the Web company and investor Carl Icahn settled a looming proxy fight to force Yahoo to strike a deal with Microsoft.

"Kevin has built a supremely talented organization and laid the foundation for the future success of Windows and our Online Services Business. This new structure will give us more agility and focus in two very competitive arenas," Ballmer said. "It has been a pleasure to work with Kevin, and we wish him well in the future."

As president of Microsoft's largest business division, Kevin Johnson spearheaded the company's pursuit of Yahoo.

Effective immediately, senior vice presidents Steven Sinofsky, Jon DeVaan and Bill Veghte will report directly to Ballmer to lead Windows/Windows Live.

In the Online Services Business, Microsoft will create a new senior lead position and will conduct a search that will span internal and external candidates. In the meantime, Senior Vice President Satya Nadella will continue to lead Microsoft?s search, MSN and ad platform engineering efforts.

"Our Windows business is firing on all cylinders," Ballmer said. "We see tremendous opportunity in search and advertising, and we have a clear strategy for investing in success today and growth in the future."

"Microsoft is a special place and presents opportunity to so many," Johnson said. "I have been so fortunate to have experienced 16 amazing years of building Microsoft?s business, learning from great leaders in the company and working with phenomenally talented people."