Justin Bieber dominates at American Music Awards

America proved its Bieber Fever was strong: The teen singer dominated the American Music Awards on Sunday night.

Bieber's wins included the show's top award, artist of the year. His mom joined him onstage as he collected the trophy, beating out Rihanna, Maroon 5, Katy Perry and Drake.

"I wanted to thank you for always believing in me," Bieber said, looking to his mom.

The 18-year-old also won the honor in 2010. He said it's "hard growing up with everyone watching me" and asked that people continue to believe in him.

Bieber and Nicki Minaj performed together — and separately — at the AMAs, and were both multiple winners.

But another collaboration was the night's most colorful performance: Korean rapper PSY and MC Hammer. Hammer joined the buzzed-about pop star for his viral hit "Gangnam Style." PSY rocked traditional "Hammer" pants as they danced to his jam and to Hammer's "Too Legit to Quit."

Bieber won favorite pop/rock male artist in the first award handed out at Sunday's show and gave a shout-out to those who didn't think he would last on the music scene.

"I want to say this is for all the haters who thought I was just here for one or two years. I feel like I'm going to be here for a very long time," he said.

He also won favorite pop/rock album for his platinum-selling third album, "Believe." He gave a stripped down, acoustic performance of "As Long As You Love Me," then transitioned to the dance-heavy "Beauty and a Beat," where Minaj joined him onstage, grinding with the teen for a few seconds.

Minaj, who wore three different wigs and four outfits throughout the night, repeated her AMAs wins from last year, picking up trophies for favorite rap/hip-hop artist and album for "Pink Friday: Roman Reloaded." She was in an all-white get-up, including fur coat and pink hair when she performed her new song "Freedom." The scene was ghostly and snowy, as a choir — also in white — joined her onstage. One background singer stole the performance, belting semi-high notes as Minaj looked on.

As Bieber won his second award, he was kissed on the neck by Jenny McCarthy, who presented the award.

"Wow. I feel violated right now," he said, laughing.

"I did grab his butt," McCarthy said backstage. "I couldn't help it. He was just so delicious. So little. I wanted to tear his head off and eat it."

Bieber's red and black outfit seemed to be the night's theme, as Taylor Swift and Usher wore similar ensembles.

Usher kicked off the three-hour show with green laser lights beaming onstage as he performed a medley of songs, including "Numb," ''Climax" and "Can't Stop, Won't Stop," which featured a smoky floor and a number of backup dancers, as Usher jammed in all black, with the exception of his red shoes. He won favorite soul/R&B male artist.

Swift won her fifth consecutive award for favorite country female artist.

"This is unreal. I want to thank the fans. You guys are the ones who voted on this," she said.

Swift gave a masquerade-themed performance of the pop song "I Knew You Were Trouble." She sang onstage in a light dress while dancers wore mostly black. But then she changed into a red corset and black skirt, matching their dark mood. She even danced and sang on the floor as lights flickered throughout the performance.

Dick Clark, who created the AMAs, was remembered by Ryan Seacrest and an upbeat performance by Stevie Wonder.

"What a producer he was," said Seacrest, as Wonder sang his hits, including "My Cherie Amour."

Carly Rae Jepsen, who performed early in the night, won favorite new artist.

"I am floored. Wow," she said, thanking Bieber and his manager, Scooter Braun.

Party girl Ke$ha was glammed up on the red carpet, rocking long, flowy blonde hair and a light pink dress. She switched to her normal attire when she performed her hit single "Die Young." It was tribal, with shirtless dancers in skin-tight pants, silver hair and skeleton-painted faces, who also played the drums. Ke$ha was pants-less, rocking knee-high boots and rolling on the floor as she finished up the song.

Minaj and Christina Aguilera were blonde bombshells, too: Minaj's hair was busy and full of volume and she sported a neon strapless gown to accept her first award. Aguilera wore a blonde bob in a purple dress that matched her eyeshadow.

Aguilera performed a medley of material from her new album and joined Pitbull onstage.

Kelly Clarkson also hit the stage, making a nod to her "American Idol" roots with a number on her dress and three judges looking on as she sang "Miss Independent." Then she went into "Since U Been Gone," ''Stronger" and "Catch My Breath." It's worth noting that "Idol" judge Randy Jackson introduced Clarkson, the first-ever winner of the show. He also advised people to donate through Red Cross for Superstorm Sandy victims.

Fellow "Idol" winner Carrie Underwood won best favorite country album and performed, hitting the right notes while singing "Two Black Cadillacs." She talked about singing competition shows backstage.

"These people that go on these shows are so talented, you know? And I would love to see if so many of the other artists that are out there today would go back and try out for these shows, because they might get their behinds kicked by some of the contestants," she said.

Luke Bryan won favorite country male artist and Lady Antebellum favorite country group.

American Music Awards nominees were selected based on sales and airplay, and fans chose the winners by voting online. At this award show, even the stars were fans: Pink said on the red carpet that she'd like to collaborate with Lauryn Hill. Cyndi Lauper said her musical playlist includes Pink and Minaj. Boy band The Wanted said they were excited to see PSY and Colbie Caillat wanted to watch No Doubt.

"What makes the American Music Awards special is the fans choose the winning artists," said Chester Bennington of Linkin Park, who won favorite alternative rock artist and performed "Burn It Down," as Brandy sang along and Gwen Stefani, Usher and Phillip Phillips bobbed their heads.

David Guetta won the show's first-ever electronic dance music award. Non-televised awards went to Katy Perry for pop/rock female artist, Beyonce for soul/R&B female artist, Adele for adult contemporary artist and Shakira for Latin artist.

Along with Rihanna, Minaj was the top nominee with four nominations.

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AP Entertainment Writer Sandy Cohen contributed to this report from Los Angeles.

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Follow Mesfin Fekadu on Twitter at http://twitter.com/MusicMesfin

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Online:

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Investors rush in to rent out foreclosures

The foreclosed home on Kenmore Street in Aurora was an outdated, unkempt eyesore until crews arrived this fall, performing thousands of dollars of work to make it attractive and modern, inside and out.

But it wasn't until workers walked across the street to ask for some water that neighbors Mario Cervantes and Oralia Balderas-Cervantes learned that a corporation, not a consumer, had bought the house, intending to turn it into a rental property. Despite being landlords themselves, the couple aren't sure they like the idea.

"If it's going to be a company that is watching out for the community, yes," Cervantes said. "If it's going to be a company that is watching out for themselves, no."

Added Balderas-Cervantes: "I'd rather see a homeowner. A lot of renters don't care. It's like renting a car versus buying a car. It's different."

Similar scenarios and concerns are unfolding across Chicago and in other markets hard-hit by the housing crisis. Well-capitalized, out-of-town private equity funds are scouring neighborhoods, paying cash for distressed single-family homes and renting them out. The opportunities are plentiful, enabling investment groups to profit from low home prices, rising rents and an increase in the number of potential renters.

The transactions are returning vacant properties to active use. But they also are stoking fears among neighbors and municipalities about the long-term effect of large, private investors — including many that are operating under the radar — in their communities.

"This scares the hell out of me," said Ed Jacob, executive director of Neighborhood Housing Services of Chicago Inc. "In this rush to say this is a new asset class, are we creating the next community development problem?

"You talk to them and it's all about neighborhood recovery. They all have the narrative down."

In April, housing research firm CoreLogic named the Chicago area one of the better housing markets for institutional investor funds. It cited the area's large number of foreclosures, which will increase the number of vacant homes, and the estimated rental income relative to the low cost of acquisition.

The general strategy of the companies is the same: buy low, make the necessary upgrades, fill them with tenants and then sell the homes in three to seven years. With companies and analysts anticipating projected returns of at least 8 percent, there also is talk of creating publicly traded real estate investment trusts.

"What this reminds me of is the dot-com boom," said Rick Sharga, executive vice president of Carrington Mortgage Holdings LLC, a California firm whose asset management arm is actively looking in the Chicago market. "That's what this feels like. Every investor in America wants to buy foreclosures and turn them into rentals."

Two statistics increasing that appetite are the homeownership rate and rental rates. Foreclosures, tight lending conditions and wary consumers have pushed down the nation's homeownership rate to 65.5 percent at the end of September, according to census data. Meanwhile, the percentage of vacant rental units has been on a steady decline since 2010 as more people opt for leases rather than mortgages.

Tighter inventories are pushing up rents. As of October, annualized rents in Chicago were up 7.7 percent, more than the national increase of 5.1 percent, online real estate site Trulia found.

But investors aren't flocking to all neighborhoods equally. Most want homes in desirable neighborhoods with strong area employment. They also look at the strength of local rules protecting landlords in disputes with tenants.

After vetting the tenant and securing a lease, property managers say they routinely drive by the homes and sometimes schedule inside inspections to protect their investment.

Weighing risks, rewards

It remains to be seen whether their expectations will be met. One problem with the business model is there's no performance track record to speak of. And as housing prices slowly recover, acquisition costs also will increase and cut into returns.

There also isn't any history on property management firms tasked with overseeing so many scattered-site rental properties. Any well-publicized mistakes involving poorly maintained properties or wronged tenants could taint investors' reputations.

That's one reason why big-name players are likely to avoid buying in neighborhoods where they fear a greater chance of eviction proceedings occurring.

"You make one mistake in those properties and you'll be toast," Sharga said.

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2 hurt in stabbing at North Michigan Avenue hotel

A 67-year-old man was stabbed in the neck Saturday evening near the front of the Westin Hotel on North Michigan Avenue, and a second man was cut trying to stop the assailant from fleeing, authorities and witnesses said.

The incident began shortly before 8 p.m. when the 67-year-old man was stabbed during an attempted robbery, Chicago Police News Affairs Officer Amina Greer said, citing preliminary information.

A 35-year-old man was cut in the chest as he tried to stop the assailant from fleeing, Greer said.

Police took a male into custody following the incident. A weapon was also recovered, Greer said.

The 67-year-old was taken to Northwestern Memorial Hospital, where his condition was stabilized, Greer said. The 35-year-old was taken to Northwestern in good condition.

By 8:30 p.m., crime scene tape surrounded the entrance to the Westin Hotel on Delaware Street and Michigan Avenue with patches of blood visible on the pavement, and two police cars blocked the street.

A manager at the Westin, who gave his name as Alex F., declined to comment.

Olivia Morrow, 18, said she and her friend were returning to the hotel around 8 p.m. to meet their parents when they saw police on the scene.

Morrow said shortly after that she saw about five hotel officials running out of the building toward the stairs leading to the Hancock Tower and neighboring The Cheesecake Factory Restaurant.

"They had radios and phones in their hands, saying that (the attacker) was last seen running down the stairs," Morrow said.

Genevieve Waldron of Michigan City, Ind., was among the crowd waiting for a table outside when she and her mother saw dozens of officers sprinting toward the restaurant from every direction.

"They were obviously looking for somebody and we were trying to stay out of the way," Waldron said.

A few minutes later, two officers came back up the stairs, flanking a young man who was handcuffed, and loaded him into the back of a marked car.

Neither The Cheesecake Factory nor the hotel were evacuated, as guests on the south-facing side of the building peered out of the windows to get a view of the scene. There appeared to be little commotion at the restaurant, where diners poured out into the hallways waiting for a table.

Tribune reporter Liam Ford contributed.

cdrhodes@tribune.com

Twitter: @ChicagoBreaking

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Exclusive: Facebook offering e-retailers sales tracking tool

SAN FRANCISCO (Reuters) - Facebook Inc wants more credit for making online cash registers ring.

Facebook will begin rolling out on Friday a new tool which will allow online retailers to track purchases by members of the social network who have viewed their ads.

The tool is the latest of the new advertising features Facebook is offering to convince marketers that steering advertising dollars to the company will deliver a payoff.

Facebook, with roughly 1 billion users, has faced a tough reception on Wall Street amid concerns about its slowing revenue growth.

"Measuring ad effectiveness and outcomes is absolutely crucial to all types of businesses and marketers," said David Baser, a product manager for Facebook's ads business who said the "conversion measurement" tool has been a top customer request for a long time.

The sales information that advertisers receive is anonymous, said Baser. "You would see the number of people who bought shoes," he said, using the example of an online shoe retailer. But marketers would not be able to get information that could identify the people, he added.

The conversion tool is specifically designed for so-called direct response marketers, such as online retailers and travel websites that advertise with the goal of drumming up immediate sales rather than for longer-term brand-building.

Such advertisers have long flocked to Google Inc's Web search engine, which can deliver ads to consumers at the exact moment they're looking for information on a particular product.

But some analysts say there is room for Facebook to make inroads if it can demonstrate results.

"The path to purchase" is not as direct on Facebook as it is on Google's search engine, said Debra Aho Williamson, an analyst with research firm eMarketer. But she said that providing information about customer sales conversion should help Facebook make a stronger case to online retailers.

"It lets marketers track the impact of a Facebook ad hours or days or even a week beyond when someone might have viewed the ad," said Williamson. "That allows marketers to understand the impact of the Facebook ad on the ultimate purchase."

Marketers will also have the option to aim their ads at segments of Facebook's audience with similar attributes to consumers that have responded well to a particular ad in the past, Baser said.

Online retailer Fab.com, which has tested Facebook's new service, was able to reduce its cost per new customer acquisition by 39 percent when it served ads to consumers deemed most likely to convert, Facebook said. Facebook defines a conversion as anything from a completed sale, to a consumer taking another desired action on a website, such as registering for a newsletter.

NEW OPPORTUNITIES

Shares of Facebook, which were priced at $38 a share in its May initial public offering, closed Thursday's regular session at $22.17.

In recent months, Facebook has introduced a variety of new advertising capabilities and moved to broaden its appeal to various groups of advertisers.

Chief Operating Officer Sheryl Sandberg said in October that Facebook saw multi-billion revenue opportunities in each of four groups of advertisers: brand marketers, local businesses, app developers and direct response marketers.

Facebook does not disclose how much of its ad revenue, which totaled $1.09 billion in the third quarter, comes from each type of advertiser. Pivotal Research Group analyst Brian Wieser estimates that brand marketers and local businesses account for the bulk of Facebook's current advertising revenue.

Earlier this year, Facebook introduced a similar conversion measurement service for big brand advertisers, such as auto manufacturers, partnering with data mining firm Datalogix to help connect the dots between consumer spending at brick-and-mortar and Facebook ads.

And Facebook has rolled out new marketing tools for local businesses such as restaurants and coffee shops, including a revamped online coupon service and simplified advertising capabilities known as promoted posts.

The new conversion measurement tool is launching in testing mode, but will be fully available by the end of the month, Facebook said.

(Reporting By Alexei Oreskovic; editing by Carol Bishopric)

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A night of upsets and Irish, Tide rise in football

Coming into Saturday, Oregon and Kansas State had the inside track to college football's national championship and the Southeastern Conference's run of six straight BCS titles was in jeopardy.

Then No. 2 K-State got thumped 52-24 by unranked Baylor and top-ranked Oregon fell in overtime to No. 14 Stanford, 17-14.

Now the SEC is alive and well.

And how's this for a possible national title game: Alabama vs. Notre Dame.

A week after Alabama was upset by Texas A&M, the upsets re-opened door for the fourth-ranked Crimson Tide, which shut out lower-division Western Carolina 49-0. Georgia has a title shot, too. And so does Florida.

But the happiest of all about the Ducks and Wildcats going down had to be Notre Dame and its fans.

The Fighting Irish were third in the BCS standings, behind K-State and Oregon entering the weekend. Notre Dame was staring at what must have felt unthinkable for the storied program: Finishing unbeaten and not even getting a chance to play for the BCS championship.

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EU drug regulator OKs Novartis' meningitis B shot

LONDON (AP) — Europe's top drug regulator has recommended approval for the first vaccine against meningitis B, made by Novartis AG.

There are five types of bacterial meningitis. While vaccines exist to protect against the other four, none has previously been licensed for type B meningitis. In Europe, type B is the most common, causing 3,000 to 5,000 cases every year.

Meningitis mainly affects infants and children. It kills about 8 percent of patients and leaves others with lifelong consequences such as brain damage.

In a statement on Friday, Andrin Oswald of Novartis said he is "proud of the major advance" the company has made in developing its vaccine Bexsero. It is aimed at children over two months of age, and Novartis is hoping countries will include the shot among the routine ones for childhood diseases such as measles.

Novartis said the immunization has had side effects such as fever and redness at the injection site.

Recommendations from the European Medicines Agency are usually adopted by the European Commission. Novartis also is seeking to test the vaccine in the U.S.

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Lady Gaga tweets some racy images before concert

BUENOS AIRES, Argentina (AP) — Lady Gaga's tweets were getting a lot of attention ahead of her Buenos Aires concert Friday night.

The Grammy-winning entertainer has more than 30 million followers on Twitter and that's where she shared a link this week to a short video showing her doing a striptease and fooling around in a bathtub with two other women.

She told her followers that it's a "surprise for you, almost ready for you to TASTE."

Then, in between concerts in Brazil and Argentina, she posted a picture Thursday on her Twitter page showing her wallowing in her underwear and impossibly high heels on top of the remains of what appears to be a strawberry shortcake.

"The real CAKE isn't HAVING what you want, it's DOING what you want," she tweeted.

Lady Gaga wore decidedly unglamorous baggy jeans and a blouse outside her Buenos Aires hotel Thursday as three burly bodyguards kept her fans at bay. Another pre-concert media event where she was supposed to be given "guest of honor" status by the city government Friday afternoon was cancelled.

After Argentina, she is scheduled to perform in Santiago, Chile; Lima, Peru; and Asuncion, Paraguay, before taking her "Born This Way Ball" tour to Africa, Europe and North America.

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Chocolatier finds sweet spot in Belize

Katrina Markoff, the founder of high-end Chicago chocolatier Vosges Haut-Chocolat, is nearing completion on two high-profile projects: a winery-style chocolate facility in Logan Square and an education center at a cacao plantation and eco-lodge in Belize.

Markoff isn't ready to talk about the Logan Square project, her spokeswoman said. But in an interview last week, she said she hopes the Belcampo farm in Belize will become the source of a majority of Vosges' cacao once its plants mature.

The project means Markoff will soon play a role in every aspect of production from seed selection through packaging without having to assume the financial risk of owning a tropical plantation.

Belcampo Group CEO Anya Fernald said the education center that Markoff helped design will open in mid-December, and Markoff will teach her first "master class" on cacao to guests at the 12-room lodge April 23-27. In exchange for her time and expertise, Markoff will receive a better price on the beans.

"I've always wanted to be involved through the full vertical, from actually growing the varietals of cacao I want, and being particular about how they're grown and harvested and fermented and dried," she said.

Once the farm reaches full yield in about five years, Fernald estimated it will produce 250,000 pounds of cacao annually. Already, with only 60 acres planted so far — all under a rain forest canopy — Fernald said Belcampo is already Belize's largest cacao plantation.

"The integrity of that project is really, really unique and special," Markoff said. "Typically when people buy beans to make chocolate, they just buy whatever is available in the commodity market. There's not a lot of control over how it's grafted, where it's planted, how it's nurtured, who's taking care of it. You just don't get that kind of control."

Bluhm continues gambling push

Chicago real estate and gambling executive Neil Bluhm is entering the race to build one of four planned casinos in Massachusetts and has launched an online gaming division in Chicago, said Greg Carlin, chief executive of Bluhm's Rush Street Gaming.

Earlier this year Rush Street hired Richard Schwartz from Waukegan-based WMS Industries and appointed him president of Rush Street Interactive, its new online gaming division.

"We think (Internet gaming) is going to be eventually legalized throughout the country, or in jurisdictions that have bricks-and-mortar casinos," Carlin said. "Illinois is actually a leader in selling lottery tickets online and could be a leader in Internet gaming as well if they get ahead of the curve and pass legislation before some of the other states."

Nevada and Delaware have legalized some forms of Internet gambling.

In recent years, Bluhm has built three casinos: Rivers Casino in Des Plaines, one in Pittsburgh and another in Philadelphia. In October, Bluhm sold his first U.S. casino, Riverwalk Casino and Hotel, in Vicksburg, Miss., for $141 million in cash to Churchill Downs Inc. (Bluhm held a 70 percent stake in Riverwalk.)

Churchill Downs, a horse racing and wagering company, also owns Arlington Park in Arlington Heights. Its largest shareholder is Duchossois Group, founded by Arlington Park Chairman Richard "Dick" Duchossois.

Duchossois has been trying to persuade the Illinois Legislature to approve slots at racetracks, which, if successful, would make Arlington Park a competitor of Bluhm's Des Plaines casino.

As for the Massachusetts casino, the gambling commission there will weigh applications for casino licenses well into 2013.

Alvarez joins Culloton

Public relations firm Culloton Strategies has hired Michael Alvarez, a commissioner of the Metropolitan Water Reclamation District of Greater Chicago, as senior vice president for public affairs.

As the Sun-Times reported in January, Alvarez, 32, has worked for Barack Obama, Rod Blagojevich and Richard M. Daley — while he has close ties to Ald. Richard Mell, Blagojevich's father-in-law.

In addition to his $70,000 annual salary at the water district, Alvarez has a $60,000-a-year public relations contract with the Illinois Sports Facilities Authority and a "fast-growing" lobbying practice, the Sun-Times reported.

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Metra riders could face new fare hike

Many Metra riders could be facing another fare increase this February, just one year after digging deep for the biggest fare hike in the commuter rail line's history.

Metra's board is expected to vote Friday on a recommendation to raise the price of the popular 10-ride tickets about 11 percent, the Tribune has learned.

That would mean an increase ranging from $2.75 to $9.25 per 10-ride ticket, depending on the distance.

If approved, the increase would deprive 10-ride ticket buyers of the discount traditionally associated with the ticket. Currently, 10-ride tickets cost the equivalent of nine rides.

Word of the possible increase did not set well with riders Thursday evening.

Student Satya Shah, 24, of Rogers Park, said that if the price goes up, he'll have to consider taking the CTA from Rogers Park to downtown, even though Metra is closer to his home.

"It's going to hurt the wallet," he said of an increase. "If it works out to be cheaper, I'll take the CTA."

Customers now pay anywhere from $24.75 per 10-ride ticket for close-in Metra zones to $83.25 for the farthest communities.

Ten-ride ticket users account for about 22 percent of Metra's ridership. Customers who use monthly passes — about 57 percent of Metra's riders — and those who buy single tickets would not see their fares increase.

Metra's staff estimates the fare increase would produce $8.3 million in 2013 to help meet the agency's capital needs. Those include system improvements, maintenance and equipment.

Unveiling a proposed 2013 budget totaling $713.5 million last month, Metra officials warned that they would consider "scenarios" for raising fares up to 10 percent but did not specify any options.

Friday's recommendation comes as a result of discussions among board members and Metra staff, officials said.

Spokesman Michael Gillis said Thursday that the agency wants to use the $8.3 million in additional revenue as a match to obtain federal dollars for capital needs.

Metra needs about $7.4 billion over the next 10 years to keep the commuter rail line in what officials call a "state of good repair."

Board members contacted Thursday said they expected to have a thorough discussion of the fare increase Friday before taking action.

If the board approves the increase Friday, Metra still would need to hold a series of hearings to get public comment before the increase would get final adoption. That could come as early as Metra's Dec. 14 meeting.

Arlene Mulder, who represents suburban Cook County on the board, said she had not decided whether she would support the increase.

"I feel we need to cover our costs, but I know a lot of people who are on extraordinarily tight budgets now," said Mulder, who also is the mayor of Arlington Heights. "We can't lose sight of that."

James LaBelle, who represents Lake County, said he supported increasing the price of a 10-ride ticket to cover the cost of 91/2 rides.

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Analysis: New Microsoft mantra after Sinofsky - Teamwork

SEATTLE/SAN FRANCISCO (Reuters) - The sudden departure of powerful Windows boss Steven Sinofsky this week is the first step in a plan by CEO Steve Ballmer to remodel Microsoft Corp as a much more integrated operation in an attempt to take on Apple Inc and Google Inc at their own game.

After nearly 13 years at the helm of the world's largest software maker, which just launched its first own-brand computer, sources inside the company say Sinofsky's departure signals Ballmer's new-found focus on co-operation between its self-sufficient - and sometimes warring - units.

"What I'm hearing over and over is collaboration and horizontal integration is the new mantra," said one Microsoft insider, who asked not to be named. "They (top management) understand that, if they don't move to a model where devices and software are more integrated across the entire Microsoft system, they are in a weak position."

After floundering for most of the last decade, Microsoft is trying emulate the way Apple's software and hardware - such as iTunes and the iPhone - work perfectly together; or how Google's online suite from Web search to YouTube and Gmail are seamlessly joined.

Microsoft - which Ballmer rechristened as a "devices and services company" last month - has all the parts, analysts say, but has failed to put them together. Now Ballmer looks set to reshape the company to try to make that a reality.

"I certainly expect the org chart to look a lot different six months from now," said Brad Silverberg, who ran the Windows unit during its massive growth spurt in the 1990s. "There will be attrition from Steven's (Sinofsky's) people and Steve Ballmer will have a chance to create a more harmonious organization."

Ballmer replaced Sinofsky with two executives with a reputation for co-operation. The move marks the third time in the last few years that Ballmer has replaced a single unit head with two leaders sharing responsibilities.

"Sinofsky really centralized all the power under himself. We'll see how it shakes out from here," said one manager in the Windows unit.

More fundamental organizational shifts could be in the cards.

"A lot of things are up for grabs," said David Smith at tech research firm Gartner. "How the management is structured - there could be more changes."

NO ROOM FOR AN EMPIRE BUILDER

Sinofsky, a 23-year Microsoft veteran, built up a walled empire around his Windows unit.

His hard-charging but methodical style, which took on the name "Sinofskyization," alienated other groups in the company, especially the Office unit, the other financial pillar of Microsoft's success.

"Steven is a brilliant guy who made tremendous contributions to Microsoft," said Silverberg. "But he was also a polarizing guy and the antibodies ultimately caught up with him."

The decision not to share the latest internal test versions of Windows 8 and keep the Surface tablet a secret until just before its announcement especially upset the Office group, which insiders say accounts for the lack of a fully featured Office suite on the Surface RT tablet.

"All good leaders create friction, but my guess is the cost of doing business with Sinofsky ended up outweighing the benefits," said a former Microsoft staffer who saw Sinofsky operate at close quarters.

"If you work in Steven's team, you love him," said a former colleague who now works for a financial technology firm in Seattle. "If he's outside of your team? That's where his reputation of being hard to work with came from."

Ballmer has made it clear that executives have to work together better. Next year, top managers will get bonuses based on company-wide performance, not just their own unit, which Ballmer hopes will lead to "deeper cross-organization collaboration."

But there is no guarantee Ballmer can radically redirect almost four decades of culture at Microsoft - which he is partly responsible for - that gave Windows primacy and intentionally pitted teams against one another to get the best results.

Nothing will change without new leaders from outside the company, said Trip Chowdhry, managing director at Global Equities Research.

"Microsoft is clinging to the past and they keep bringing in the people from the past. This is a fundamental flaw in the logic," Chowdhry said.

CEO THRONE

Despite urging collaboration, Ballmer - a 32-year Microsoft veteran who took over as CEO from Bill Gates in 2000 - does not let any junior executive get too close to challenging his authority.

Sinofsky, widely touted as Ballmer's successor for the past three years, was just the latest in a line of would-be CEOs. Over the last five years alone, Ballmer has seen off a clutch of rising stars that were discussed as potential leaders.

Windows and online head Kevin Johnson went to run Juniper Networks Inc, Office chief Stephen Elop went to lead phone maker Nokia, while Ray Ozzie - the software guru Bill Gates designated as Microsoft's big-picture thinker - left to start his own project.

"They've gone through quite a bit of senior management talent in the past few years. The bench is not what it used to be," said Smith at Gartner. "The overall management structure, career path, replacements, succession planning - a lot of that is an issue for Microsoft."

Ballmer's promotion of Julie Larson-Green and Tami Reller to jointly fill Sinofsky's role may only be temporary, Microsoft-watchers say.

"The question is what comes after, like in the next three years," said Rob Helm at Directions on Microsoft, an independent firm that advises business customers on how to deal with Microsoft.

(Reporting By Bill Rigby in Seattle and Alexei Oreskovic in San Francisco.; Editing by Edward Tobin, Martin Howell and Andre Grenon)

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