Microsoft is preparing to lay off as many as 18,000 workers – the biggest loss of heads in the software giant’s history – and the Nokia unit is bearing the brunt.
Microsoft CEO Satya Nadella said Thursday it would cut 14 percent of its 127,000-strong workforce over the next 12 months. It dropped the news before the markets opened for business.
Shares of Microsoft were initially up 3.84 per cent to $44.08 in trading on Wall St upon receipt of the news.
Of these cuts, 12,500 “professional and factory positions” will be going from the former Nokia handset business. That should leave approximately 17,500 Nokia staff with Redmond once the dust has settled.
Microsoft said these jobs would go "though synergies and strategic alignment of the Nokia devices and services business" it bought in April.
The factory positions cuts are curious, given Microsoft bought Nokia in part because of its engineering excellence on handsets, to further the Windows Phone mission.
Today, Windows Phone has around five per cent market share.
Microsoft plans to take a charge of between $1.1bn and $1.6bn through out the course of the new fiscal year, which started on 1 July.
The cuts are being made on an accelerated timetable: restructuring will be “substantially complete” by 31 December and “fully completed” by June 30 2015.
Microsoft said the steps would “simplify” its operations and “align” Nokia devices and services within the company’s overall strategy.
Microsoft’s newly installed chief executive had hinted at forthcoming cuts during his widely reported and wordy memo last week on the company’s future.
What wasn’t known, however, was the scale of the losses – although it was clear substantial cuts would be needed.
Buying Nokia’s handset business took Microsoft clean through the 100,000-head count barrier, bringing its numbers up to nearly 130,000 staff.
This is the second round of cuts in Microsoft’s history: Steve Ballmer unleashed the pink slips in 2009 for the first time, cutting 5,000, or five per cent of all staffers, to save money.
Those cuts came as the PC business was going south. Back in 2009, marketing took the hit – along with a string of 13 small businesses that included MSN Encarta. ®