 "Microsoft lay-offs to cut up to 18k jobs")
Microsoft said Thursday that it planned to eliminate up to 18,000 jobs over the next year in a shake-up intended to help the company move more quickly in the market.
The cuts are the largest in the company's 39-year history, representing about 14 per cent of its work force.
Microsoft will make the deepest cuts from the businesses it acquired from the Finnish phone maker Nokia. About 12,500 of the jobs being eliminated will come from the Nokia groups, resulting from the closing of a factory in Hungary and other changes.
That is about half the number of employees who joined Microsoft from Nokia a few months ago, when Microsoft completed its acquisition of Nokia's mobile business. In related news, Microsoft said it would no longer make Nokia phones based on the Android operating system, switching its low-end phones to Microsoft's Windows Phone software.
Microsoft said it would take a charge of $1.1 billion to $1.6 billion to cover severance and related costs from the lay-offs over the next year.
On Thursday, Satya Nadella, the company's chief executive, said in an email to employees announcing the job cuts that the lay-offs are an effort to become more agile, a message he has given repeatedly since he took the job in February. "Having a clear focus is the start of the journey, not the end," he said in the email. "The more difficult steps are creating the organisation and culture to bring our ambitions to life."
He added: "The first step to building the right organisation for our ambitions is to realign our work force."
The huge job cuts in the businesses it acquired from Nokia, which is based in Finland, raise questions about Microsoft's plans in the market for mobile devices. The acquisition, initiated by Steven A Ballmer, Microsoft's previous chief executive, greatly increased the company's presence in the hardware business, which is outside its traditional expertise. The deal has been an unpopular one with investors and many people inside Microsoft.
After the initial announcement of Microsoft's acquisition, Nokia employees and the wider Finnish community greeted the pending deal with growing pessimism, according to David J Cord, an American based in Helsinki and the author of "The Decline and Fall of Nokia."
Cord said many of the best engineers from the handset business had already left the company. The exodus has left Microsoft's new cellphone unit with many of the lesser well-trained engineers.
While Finland had once been known for its telecom prowess, many of the new generation of developers and engineers also have shunned corporate jobs with Nokia. Instead, they have turned to the country's growing gaming industries. Companies like Supercell, which makes mobile games like Clash of Clans and is valued at around $3 billion, have gained global acclaim.
"Everyone had been expecting this news," said Cord, in reference to Microsoft's job cuts. "It has hurt the Finnish psyche. When Nokia was on top of the world, so was Finland. Now that Nokia has fallen, so has the country."
Previously, the largest lay-offs at the company were in 2009, when about 5,800 people were affected during the recession. Since then, Microsoft has had a few more rounds of job cuts, but the number of employees eliminated was typically in the dozens or hundreds.
In February, Nadella became the third chief of Microsoft as Ballmer stepped down, and Bill Gates, a company founder, left his role as chairman and become a technology advisor to Nadella. Microsoft was often criticised for being unfocused during Ballmer's tenure, and for having a swelling product line and layers of bureaucracy.
"Under the Ballmer era there were many layers of management and a plethora of expensive initiatives being funded that has thus hurt the strategic and financial position the company is in, especially in light of digesting the Nokia acquisition," said Daniel Ives, an analyst at FBR Capital Markets, who called the cuts necessary.
Microsoft, a longtime leader in the technology industry, has struggled to find the same success in markets like mobile and internet search that it did with personal computers. The company anticipated the rise of smartphones and tablet computers, but its products failed to capitalise on that foresight, and Apple and Samsung now dominate those markets.
Nadella signalled in a company memorandum last week that big organisational changes were coming soon. He sought to define his vision for Microsoft as a maker of productivity tools for a technology landscape shaped by cloud and mobile computing.
"We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes," he wrote in the memo. "Culture change means we will do things differently."
Those statements were widely seen as foreshadowing some lay-offs, and maybe even peeling off some business units. So far, Nadella has not dropped any major products or businesses.
Still, investors have welcomed his overtures. Shares have steadily risen since February, and added more than five per cent in the last week as rumours swirled about the lay-offs. They rose another 2.9 per cent in early trading on Thursday.
The cuts are the largest in the company's 39-year history, representing about 14 per cent of its work force.
Microsoft will make the deepest cuts from the businesses it acquired from the Finnish phone maker Nokia. About 12,500 of the jobs being eliminated will come from the Nokia groups, resulting from the closing of a factory in Hungary and other changes.
That is about half the number of employees who joined Microsoft from Nokia a few months ago, when Microsoft completed its acquisition of Nokia's mobile business. In related news, Microsoft said it would no longer make Nokia phones based on the Android operating system, switching its low-end phones to Microsoft's Windows Phone software.
Microsoft said it would take a charge of $1.1 billion to $1.6 billion to cover severance and related costs from the lay-offs over the next year.
On Thursday, Satya Nadella, the company's chief executive, said in an email to employees announcing the job cuts that the lay-offs are an effort to become more agile, a message he has given repeatedly since he took the job in February. "Having a clear focus is the start of the journey, not the end," he said in the email. "The more difficult steps are creating the organisation and culture to bring our ambitions to life."
He added: "The first step to building the right organisation for our ambitions is to realign our work force."
The huge job cuts in the businesses it acquired from Nokia, which is based in Finland, raise questions about Microsoft's plans in the market for mobile devices. The acquisition, initiated by Steven A Ballmer, Microsoft's previous chief executive, greatly increased the company's presence in the hardware business, which is outside its traditional expertise. The deal has been an unpopular one with investors and many people inside Microsoft.
After the initial announcement of Microsoft's acquisition, Nokia employees and the wider Finnish community greeted the pending deal with growing pessimism, according to David J Cord, an American based in Helsinki and the author of "The Decline and Fall of Nokia."
Cord said many of the best engineers from the handset business had already left the company. The exodus has left Microsoft's new cellphone unit with many of the lesser well-trained engineers.
While Finland had once been known for its telecom prowess, many of the new generation of developers and engineers also have shunned corporate jobs with Nokia. Instead, they have turned to the country's growing gaming industries. Companies like Supercell, which makes mobile games like Clash of Clans and is valued at around $3 billion, have gained global acclaim.
"Everyone had been expecting this news," said Cord, in reference to Microsoft's job cuts. "It has hurt the Finnish psyche. When Nokia was on top of the world, so was Finland. Now that Nokia has fallen, so has the country."
Previously, the largest lay-offs at the company were in 2009, when about 5,800 people were affected during the recession. Since then, Microsoft has had a few more rounds of job cuts, but the number of employees eliminated was typically in the dozens or hundreds.
In February, Nadella became the third chief of Microsoft as Ballmer stepped down, and Bill Gates, a company founder, left his role as chairman and become a technology advisor to Nadella. Microsoft was often criticised for being unfocused during Ballmer's tenure, and for having a swelling product line and layers of bureaucracy.
"Under the Ballmer era there were many layers of management and a plethora of expensive initiatives being funded that has thus hurt the strategic and financial position the company is in, especially in light of digesting the Nokia acquisition," said Daniel Ives, an analyst at FBR Capital Markets, who called the cuts necessary.
Microsoft, a longtime leader in the technology industry, has struggled to find the same success in markets like mobile and internet search that it did with personal computers. The company anticipated the rise of smartphones and tablet computers, but its products failed to capitalise on that foresight, and Apple and Samsung now dominate those markets.
Nadella signalled in a company memorandum last week that big organisational changes were coming soon. He sought to define his vision for Microsoft as a maker of productivity tools for a technology landscape shaped by cloud and mobile computing.
"We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes," he wrote in the memo. "Culture change means we will do things differently."
Those statements were widely seen as foreshadowing some lay-offs, and maybe even peeling off some business units. So far, Nadella has not dropped any major products or businesses.
Still, investors have welcomed his overtures. Shares have steadily risen since February, and added more than five per cent in the last week as rumours swirled about the lay-offs. They rose another 2.9 per cent in early trading on Thursday.
©2014 The New York Times News Service