Twelve hundred employees in the greater Puget Sound area will be ending their employment relationship with Microsoft as part of a first-round, down- sizing under new CEO Satya Nadella. The employment cutbacks constitute the first phase of a rumored 18,000 in employment cuts representing the largest layoff round the company has ever faced in its 39 year history.
Microsoft added 25,000 new employees alone when it acquired Nokia. About 12,500 of the jobs being eliminated will come from the Nokia groups, or from overlap at Microsoft resulting from the deal. Microsoft said 1,100 job cuts would come from Finland, and another 1,800 from a Nokia factory in Hungary.
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. A “Windows FIrst” initiative promising a leaner, more nimble focus from the company has been announced the clompany’s Worldwide Partners conferdnce now underway in the antiona’s capial.
Nadella will hold a Q&A with employees tomorrow when he will address the layoffs in more details
“Having a clear focus is the start of the journey, not the end,” he said in an email today. “The more difficult steps are creating the organization and culture to bring our ambitions to life.”
“The first step to building the right organization for our ambitions is to realign our work force,” he said.
Next week, Microsoft’s earnings announcement will have to contend with a charge-off accounting for $1.1 billion to $1.6 billion to cover severance and related costs.
“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 share value climbed 5 percent in the last week as rumors swirled about the layoffs. They rose another 2.9 percent in early trading on Thursday. [24×7]
