Microsoft to ax 18,000 jobs this year, laying off more than 14% of total workforce

Posted:
in General Discussion edited July 2014
Microsoft, as was expected, announced on Thursday that it will be laying off employees this year, but the total number of cuts are much higher than anticipated, representing by far the largest-ever personnel reduction in the Windows maker's history.

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A total of 18,000 workers will be laid off over the next year, Microsoft revealed, with the bulk of those -- 12,500 jobs --?coming from professional and factory positions related to the purchase of Nokia. Microsoft's $7.2 billion buyout of Nokia's hardware division added some 30,000 employees to the company's payroll.

With the remaining 5,500 layoffs coming from other departments, the 18,000 sum represents by far the largest round of personnel cuts in Microsoft's corporate history. Its previous record was the axing of 5,800 jobs in 2009.

As of early June, Microsoft had just over 127,000 total employees. That means the 18,000 cuts would represent more than 14 percent of the Redmond, Wash., company's global workforce.

Microsoft said the "restructuring plan" will be "substantially complete" by the end of this year, and fully completed by the end of June 2015. It expects to incur up to $800 million in associated severance and benefit costs, as well as between $350 million and $800 million asset-related charges.

Word first leaked earlier this week that Microsoft was set to announce a major new round of layoffs, though it was unclear at the time whether the total number of cuts would be the company's largest ever. With Thursday's official announcement, it's now known that the 18,000 removed workers will be more than three times larger than its previous biggest layoffs.

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The measures are the latest in a string of changes for the company, which is attempting to reclaim some of its past glories which have been lost to mobile devices. Microsoft was a major player in the smartphone space before the iPhone and device's running Google's Android took over the market, while sales of low-end PCs have been hurt by the success of the iPad.

While 18,000 jobs will be lost in the next year, the biggest firing may have been the ouster of former Chief Executive Steve Ballmer, who is rumored to have been squeezed out of the company due to a lack of support from Microsoft's board of directors. Ballmer faced significant criticism for failing to adapt and compete with Apple's iPhone and iPad, while high-profile misses with the company's Windows Vista and Windows 8 operating system releases were believed to have contributed to slumping PC sales.

Ballmer's replacement, and the man overseeing the massive round of layoffs, is CEO Satya Nadella, who took over the role in February. The cuts being made under his watch are part of a major attempt to turn the company's fortunes around and take back lost market share in mobile and reinvigorate sales growth in PCs.
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Comments

  • Reply 1 of 107
    asciiascii Posts: 5,941member
    Hopefully some of the people let go were the ones who designed the GUI for Windows 8. There are open source (i.e. designed for free) GUIs that are better than that.
  • Reply 2 of 107
    rogifanrogifan Posts: 10,669member
    Stock is way up pre-market. Stock very well might be up 7-8% this week and that's before earnings announcement on the 22nd.
  • Reply 3 of 107
    ajbdtc826ajbdtc826 Posts: 190member
    Lay-offs, the laziest business strategy. This just proves Ballmer's incompetency even further.
  • Reply 4 of 107
    richlrichl Posts: 2,213member
    Quote:

    Originally Posted by ascii View Post



    Hopefully some of the people let go were the ones who designed the GUI for Windows 8. There are open source (i.e. designed for free) GUIs that are better than that.

     

    It's mostly people who've come over from Nokia.

  • Reply 5 of 107
    elijahgelijahg Posts: 950member
    ajbdtc826 wrote: »
    Lay-offs, the laziest business strategy. This just proves Ballmer's incompetency even further.

    Uh, you realise Ballmer has been gone for 6 months?
  • Reply 6 of 107
    bugsnwbugsnw Posts: 717member

    So that helps the bottom line. Any ideas on how to grow the top line?

  • Reply 7 of 107
    As was expected America went bankrupt.
  • Reply 8 of 107
    mrboba1mrboba1 Posts: 270member
    Quote:

    Originally Posted by RichL View Post

     

     

    It's mostly people who've come over from Nokia.


     

    But it's still 5500 that weren't from Nokia, which still rivals their biggest layoff ever.

     

    I'd rather see their marketing dept get a big hit than their GUI people. Most of them are following directives, and they don't need to concentrate on marketing their products. They need to make better ones.

  • Reply 9 of 107
    So, Microsoft should lay off 50% of their workforce and see MSFT shares shoot up over 20%.

    Winning.
  • Reply 10 of 107
    vagvobavagvoba Posts: 16member
    How many of these jobs will be cut in the US? Nokia doesn't have manufacturing facilities in the US. I have the feeling that out of the 18000 layoffs, very few will be in the US.
    According to their website they have factories in Brazil, China, Hungary, India, Mexico, South Korea, and Vietnam.
    http://www.nokia.com/global/about-us/people-and-planet/operations/production-facilities/production-facilities/
    Regarding engineering, marketing, sales, those employees are all over the world, especially the ones related to Nokia.
  • Reply 11 of 107
    jameskatt2jameskatt2 Posts: 718member
    Now Nadella's remarks about Microsoft's direction makes sense.
    They were corporate-speak for massive layoffs.
    And they indicate that Microsoft still is rudderless.
  • Reply 12 of 107
    SpamSandwichSpamSandwich Posts: 31,191member
    In fairness, Microsoft needs to get rid of almost all Nokia employees. This is actually an absolutely necessary move.
  • Reply 13 of 107
    negafoxnegafox Posts: 480member

    I do not how Microsoft handled these layoffs, but in general, I hate how a lot of software companies handle layoffs. They tend to separate employees into two or three groups with one of the groups receiving the ax. The anxiety of clearly suspecting exactly why everybody is being separated despite superior feigning ignorance. And then at the meeting learning that everybody not present is packing up their belongings and leaving the office. But hey, lets follow up with a company sponsored lunch or movie for retained employees. Even more fun is when you realize your spouse is not in the retained group (that happened to me a few years back).

  • Reply 14 of 107
    bugsnwbugsnw Posts: 717member

    I haven't heard the new CEO chime in about specifics but one thing they can start doing is making beautiful products. For instance, there's no comparison between Office and iWork. The latter is well designed, easy, pleasing to use, and allows one to create exceptionally beautiful documents. Office? Well....it's a standard. For now.

     

    I just keep going back to this Jobs interview on MS and lack of taste:

     

     

    MS: Hire some Jonny Ives. Then listen to them.

  • Reply 15 of 107
    dick applebaumdick applebaum Posts: 12,520member
    18,000 Sinofskys + 1 Ballmer + 1 Gates ...

    Ballsy move!

    Nadella just bought 3 envelopes ...
  • Reply 16 of 107
    rogifanrogifan Posts: 10,669member
    jameskatt2 wrote: »
    Now Nadella's remarks about Microsoft's direction makes sense.
    They were corporate-speak for massive layoffs.
    And they indicate that Microsoft still is rudderless.
    Is there anything MS could do that you wouldn't call rudderless?
  • Reply 17 of 107
    jungmarkjungmark Posts: 6,705member
    Such a shame for the employees. I heard the layoffs will continue until morale improves.
  • Reply 18 of 107
    rogifan wrote: »
    Is there anything MS could do that you wouldn't call rudderless?

    The rudder?
  • Reply 19 of 107
    inklinginkling Posts: 731member
    Where are these jobs? The mention of Nokia suggest that many of the white-collar jobs will be in Finland, where Nokia is a huge slice of the nation's high-tech industry. And those that are factory jobs in places such as South Korea suggests that Nokia/Microsoft is joining the march to contracting out to huge almost-sweatshop factories built wherever the pay is the lowest.

    That's not healthy for a global economy. Kill jobs and over the long run you eliminate the ability of people to buy your products.
  • Reply 20 of 107
    Meh. They grew too big.
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