Microsoft CEO on Mass Layoffs: ‘We Are Moving Now to Start Reducing the First 13,000 Positions’

By Kelly Teal Comments
Print

**Editor's Note: Click here for a recap of layoffs impacting some of the biggest names doing business in the indirect channel.**

Microsoft soon will lay off the equivalent of a small city because of its Nokia acquisition in April.

The Redmond, Wash.-based software giant on Thursday made good on reports from earlier this week that it would axe jobs. What wasn’t so expected was the number: up to 18,000, more than three times the company’s record figure of 5,900 five years ago.

“We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months," CEO Satya Nadella told employees in a July 17 email.

“These steps will result in the elimination of up to 18,000 positions over the next year," he added. That means rolls will drop from about 127,000 workers to 109,000.

The cuts will hit factory and professional workers, Microsoft said. Most of the layoffs will be done by Dec. 31 of this year, with the rest implemented by June 30, 2015. It was not clear in which divisions the remaining 5,500-6,000 job losses might take place.

Microsoft told investors in a Securities and Exchange Commission that the layoffs will incur pre-tax charges of $1.1 billion-$1.6 billion over the next four quarters, due to costs for assets, and severance and benefits packages.

In a separate email, Stephen Elop, executive vice president of Microsoft, told Devices Group employees that the role of phones within Microsoft is different than it was within Nokia.

“Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft all our devices are intended to embody the finest of Microsoft’s digital work and digital life experiences, while accruing value to Microsoft’s overall strategy," he wrote. “Our device strategy must reflect Microsoft’s strategy and must be accomplished within an appropriate financial envelope."

As a result, Microsoft will focus much of its attention on the market for Windows Phone, he said. The company intends to do that by “targeting the more affordable smartphone segments" with the Lumia model, Elop wrote.

Microsoft also will “deliver additional lower-cost Lumia devices by shifting select future Nokia X designs and products to Windows Phone devices." In the meantime, Microsoft will keep selling and supporting existing Nokia X products, Elop said.

It also is working on strategies to pursue higher-end customers. To do that, “we will focus on delivering great breakthrough products in alignment with major milestones ahead from both the Windows team and the Applications and Services Group," Elop wrote.

Those efforts are responses to steep competition from Apple and Google.

The layoffs news comes five days before Microsoft holds the earnings call for its fiscal fourth quarter.

Comments
HELLO
comments powered by Disqus