Microsoft to cut 18,000 jobs this year as it chops Nokia
Saturday, 19 July 2014 00:00
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Reuters: Microsoft Chief Executive Officer Satya Nadella kicked off one of the largest layoffs in tech history on Thursday, hoping to reshape the aging PC industry titan into a nimbler rival to Apple and Google, and jolt a culture at the company that is used to protecting its existing Windows and Office franchises.
Microsoft Corp said on Thursday it will slash up to 18,000 jobs, or 14% of its workforce, over the next 12 months as it almost halves the size of its newly acquired Nokia phone business and tries to become a cloud-computing and mobile-friendly software company.
The larger-than-expected cuts are the deepest in the software giant’s 39-year history and come five months into Nadella’s tenure.Beyond the Nokia reductions, Nadella gave few clues about where the ax will fall or what areas will receive more funding.
One source briefed on the cuts said a major victim would be the 175-strong Xbox Entertainment Studios unit, which will start to wind down efforts to create original content. But it will continue to work on its highest-profile project, a filmed version of the blockbuster ‘Halo’ videogame.
Nadella said he will answer questions from employees at a town hall meeting at Microsoft headquarters in Redmond, Washington, on Friday and flesh out his plans publicly after Microsoft’s quarterly earnings report on July 22.
“We will simplify the way we work to drive greater accountability, become more agile and move faster,” Nadella wrote to employees in a memo made public early Thursday. “We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making.”
The size of the cuts were welcomed by Wall Street, which was critical of the Nokia acquisition and viewed Microsoft as bloated under previous CEO Steve Ballmer, topping 127,000 in staff after absorbing Nokia earlier this year.
“This is about double what the Street was expecting,” said Daniel Ives, an analyst at FBR Capital Markets. “Nadella is clearing the decks for the new fiscal year. He is cleaning up part of the mess that Ballmer left.”
Microsoft shares rose 1.8% to $ 44.88 on Nasdaq, reaching their highest since the technology stock boom of 2000.
About 12,500 of the layoffs will come from eliminating overlaps with the Nokia unit, which Microsoft acquired in April for $ 7.2 billion, with the bulk of the cuts coming from Nokia itself. The acquisition of Nokia’s handset business in April added 25,000 people to Microsoft’s payroll.
