Microsoft cutting 18,000 jobs; shows possible job trend
LOS ANGELES (AP) – Microsoft announced the biggest layoffs in its history Thursday, saying it will cut 18,000 jobs as it streamlines its Nokia mobile device business to focus on using the Windows Phone operating system.
Although the job cuts were expected, the extent of the eliminations is a surprise, amounting to 14 percent of the company’s workforce. It’s CEO Satya Nadella’s boldest move since taking the reins from Steve Ballmer in February. Ballmer announced the Nokia acquisition last September, a month after he announced that he would resign.
In a public email to employees Thursday, Nadella said the changes were needed for the company to “become more agile and move faster.”
Nadella indicated that Microsoft will largely abandon low-price Nokia Asha phones – which work on their own non-Windows operating system – and reverse a strategically questionable move by Nokia in February to launch a line of phones called “X” that supported rival Google Inc.’s Android platform.
“The first-party phone portfolio will align to Microsoft’s strategic direction,” Nadella said in the memo. “To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences.”
Nadella added the changes are “difficult, but necessary.”
Of the job cuts, about 12,500 professional and factory jobs related to the Nokia acquisition will be eliminated, including 1,100 in Finland. Some 1,350 Seattle-area workers around Microsoft’s Redmond, Washington headquarters were also notified Thursday, as were 1,800 workers in Hungary.
Microsoft expects charges of $1.1 billion to $1.6 billion over the next four quarters, largely for severance payments. The move puts the company on track to meet the target it set in September, when it announced the Nokia purchase, of saving $600 million in annual costs within 18 months after the deal closed.