Microsoft Corporation expected to announce 6,000 job cuts today

Deepest job cuts in Microsoft's 39-year history come 5 months into tenure of CEO Satya Nadella.

By: Reuters | Seattle | Published:July 17, 2014 11:58 am
Microsoft CEO Satya Nadella had outlined plans for a 'leaner' business in a public memo to employees last week. (Image Courtesy: Microsoft) Microsoft CEO Satya Nadella had outlined plans for a ‘leaner’ business in a public memo to employees last week. (Image Courtesy: Microsoft)

Microsoft Corp is set to cut more than 6,000 jobs in an announcement expected early Thursday, according to sources familiar with the matter, as it trims its newly acquired Nokia phone business and reshapes itself as a cloud-computing and mobile-friendly software company.

What could be the deepest job cuts in the company’s 39-year history come five months into the tenure of Chief Executive Officer Satya Nadella, who outlined plans for a “leaner” business in a public memo to employees last week.

Many of the cuts are expected to come from the Nokia unit, which Microsoft acquired in April for $7.2 billion, pushing up Microsoft’s headcount by a quarter to 127,000. Microsoft said when it struck the deal to buy the Finnish phone maker that it would cut $600 million per year in costs within 18 months of closing the acquisition.

Microsoft is also expected to trim staffing at its Xbox game and entertainment unit, which Nadella last week praised but stopped short of describing as a “core” business.

Nadella’s cuts are set to be the biggest at the Redmond, Washington-based company since his predecessor Steve Ballmer axed 5,800, or about 6 percent of headcount at that time, in the depths of recession in early 2009.

The new CEO’s move is designed to help Microsoft shift from being a primarily software-focused company to one that sells online services, apps and devices that it hopes will make people and businesses more productive. Nadella needs to make Microsoft a stronger competitor to Google Inc and Apple Inc , which have dominated the new era of mobile-centric computing.

Marking this change of emphasis, Nadella last week rebranded Microsoft as “the productivity and platform company for the mobile-first and cloud-first world.”

Microsoft is not alone among the pioneers of the personal computer revolution that are now slimming down as they adapt to the Web-focused world.

PC-maker Hewlett-Packard Co is in the midst of a radical three-to-five-year plan that will lop up to 50,000 of its 250,000 staff.

International Business Machines is undergoing a “workforce rebalancing,” which analysts say could mean 13,000, or about 3 percent of its staff, being laid off or transferred to new owners as units are sold.

Chip maker Intel Corp and network equipment maker Cisco Systems Inc both said in the past year they are cutting around 5 per cent of their staff.

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  1. C
    Jul 17, 2014 at 8:53 am
    I bet the employees are nervous wrecks now, wondering if they'll get the axe or not. It will probably be a month or more before employee morale and productivity return to normal. Corporate bloodbaths are frightening if you're potentially one of the victims.
  2. I
    Ian Moyse
    Jul 17, 2014 at 2:36 pm
    Not the 1st large b name IT legacy firm to do this recently- add to it HP, IBM, Cisco Systems and Intel amongst others! This has been long looming and expect MS likely to add more to this as time progresses as HP did (now on their 3rd big round). It is an unfortunate part of today's world that legacy IT vendors who are top heavy in people and have structures designed for the old world will have to adjust and its gonna be painful.Look at the cloud type focused vendors, operating far more agile and growing yet delivering more innovation and updates quicker than software vendors (typically 3-4 a yea instead of 1 every 2 to 3 years !). Legacy vendors market domination is up for grabs and their b name nor historical performance will carry them through.It has already happened in other industries with examples rife of big b dominating providers wiped out - Take Blockbuster failing to adjust to Netflix and Lovefilm and Kodak to the digital photography world!
  3. 6
    Jul 18, 2014 at 2:10 pm
    I was looking forward to upgrading from PS3 to Xbox One, now I think maybe I should stick with Playstation since MS is gutting the Xbox group