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Microsoft to cut 18,000 jobs to remove Nokia duplication

By Tajuddin
Jul 17th, 2014

Washington (DIPLOMAT)- Big job cuts have been announced by Microsoft. The world’s largest software maker is eliminating up to 18,000 positions over the next year.

That is 14 percent of its total workforce, more than had been expected.

Chief Executive Officer Satya Nadella – who has been in the job for five months – said Microsoft needs to be “more agile and move faster” with “fewer layers of management”.

About 12,500 of the layoffs are at Nokia, the mobile phone company that was purchased before Nadella became boss.

Scott Kessler, Senior Analyst at S&P Capital IQ gave his opinion on that: “These changes probably are painful and unfortunate in many respects. The reality is that I don’t know that Satya Nadella would have acquired the Nokia kind of businesses that were bought in April. That was a deal he inherited.”

The acquisition of Nokia’s handset business added 25,000 people to Microsoft’s payroll, and many on Wall Street saw the company as bloated under previous CEO Steve Ballmer.

The Nokia-related cuts were widely expected. Microsoft said when it struck that deal that it would cut $600 million (443 million euros) per year in costs within 18 months of closing the deal.

Beyond the Nokia cuts, Nadella gave few clues about where the ax will fall or what areas will receive additional funding.

The company did say the first wave of layoffs would affect 1,351 jobs in the Seattle area.

The CEO will reveal more about Microsoft’s shift to being a cloud-computing and mobile-friendly software company after the quarterly earnings report on July 22.

He needs to make Microsoft a stronger competitor to Google and Apple, which dominate the new era of mobile-centric computing.

The company said it expects to take pretax charges of $1.1 billion (812 million euros) to $1.6 billion (1.18 billion euros) over the next four quarters to account for the costs of the layoffs.

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