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Microsoft to cut 18,000 jobs in next 12 months with 12,500 from ex-Nokia unit
By Michael Hennigan, Finfacts founder and editor
Jul 17, 2014 - 2:07 PM
Microsoft's founding employees gathered in 1978 to take a portrait before the company moved to Washington State from Albuquerque, New Mexico. Front row (left to right): Bill Gates, Andrea Lewis, Marla Wood, and Paul Allen. Middle row: Bob O'Rear, Bob Greenberg, Marc McDonald, and Gordon Letwin. Back row: Steve Wood, Bob Wallace, and Jim Lane. Not pictured is Miriam Lubow. Courtesy of Microsoft
Microsoft announced today that it plans to cut as
many as 18,000 jobs, or 14% of its work force, over the next year, part of a
retooling plan in response to the acquisition of Nokia's mobile phone business.
Some 1,100 jobs to be lost in Finland from a payroll of 5,000.
About 12,500 will be professional and factory positions eliminated through
synergies with the Nokia operations. The acquisition boosted Microsoft's
employee total to more than 120,000 from 99,000, The Wall Street Journal
reported last week.
In fiscal 2013 ending Microsoft's revenues were $78bn (€57.5bn) and its net
income was $22bn (€19.8bn).
The Journal said Microsoft demonstrated in April
that its corporate profit engine was steaming along under its new boss during
his first quarter at the helm. The software giant posted strong quarterly sales
from office tools, database and others programs for computer centers that
historically account for the majority of its profit.
Staff were sent an
email today from Satya Nadella, Microsoft's chief executive.
From: Satya Nadella
To: All Employees
Date: July 17, 2014 at 5:00 a.m. PT
Subject: Starting to Evolve Our Organization and Culture
Last week in my email to you I synthesized our strategic direction as a
productivity and platform company. Having a clear focus is the start of the
journey, not the end. The more difficult steps are creating the organization and
culture to bring our ambitions to life. Today I’ll share more on how we’re
moving forward. On July 22, during our public earnings call, I’ll share further
specifics on where we are focusing our innovation investments.
The first step to building the right organization for our ambitions is to
realign our workforce. With this in mind, we will begin to reduce the size of
our overall workforce by up to 18,000 jobs in the next year. Of that total, our
work toward synergies and strategic alignment on Nokia Devices and Services is
expected to account for about 12,500 jobs, comprising both professional and
factory workers. 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. It’s important to note that while we are
eliminating roles in some areas, we are adding roles in certain other strategic
areas. My promise to you is that we will go through this process in the most
thoughtful and transparent way possible. We will offer severance to all
employees impacted by these changes, as well as job transition help in many
locations, and everyone can expect to be treated with the respect they deserve
for their contributions to this company.
Later today your Senior Leadership Team member will share more on what to expect
in your organization. Our workforce reductions are mainly driven by two
outcomes: work simplification as well as Nokia Devices and Services integration
synergies and strategic alignment.
First, we will simplify the way we work to drive greater accountability, become
more agile and move faster. As part of modernizing our engineering processes the
expectations we have from each of our disciplines will change. In addition, we
plan to have fewer layers of management, both top down and sideways, to
accelerate the flow of information and decision making. This includes flattening
organizations and increasing the span of control of people managers. In
addition, our business processes and support models will be more lean and
efficient with greater trust between teams. The overall result of these changes
will be more productive, impactful teams across Microsoft. These changes will
affect both the Microsoft workforce and our vendor staff. Each organization is
starting at different points and moving at different paces.
Second, we are working to integrate the Nokia Devices and Services teams into
Microsoft. We will realize the synergies to which we committed when we announced
the acquisition last September. The first-party phone portfolio will align to
Microsoft’s strategic direction. 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. In addition, we plan to shift select Nokia X
product designs to become Lumia products running Windows. This builds on our
success in the affordable smartphone space and aligns with our focus on Windows
Making these decisions to change are difficult, but necessary. I want to invite
you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will
ask any question that’s on your mind. Thank you for your support as we start to
take steps forward in evolving our organization and culture.
Microsoft's original employees got together to reshoot the famous 1978 photo in April 2008. Front row (left to right): Bill Gates, Andrea Lewis, Miriam Lubow, Marla Wood, and Paul Allen. Back row: Bob O'Rear, Steve Wood, Bob Greenberg, Marc McDonald, Gordon Letwin, and Jim Lane. Not pictured is Bob Wallace, who had died. Courtesy of Microsoft
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