Microsoft To Lay Off Up To 18,000, With Nokia Focus Of Cuts

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Microsoft to Lay Off Up to 18,000, With Nokia Focus of Cuts

 

Workers on Thursday leaving Microsoft offices in Finland, where 1,100 of the up to 18,000 jobs will be eliminated. CreditMarkku Ruottinen/Lehtikuva, via Reuters

 

SEATTLE — Microsoft said Thursday that itplanned to eliminate up to 18,000 jobs over the next year in a shake-up intended to help the company move more quickly in the market.

The cuts are the largest in the company’s 39-year history, representing about 14 percent of its work force.

Microsoft will make the deepest cuts from the businesses it acquired from the Finnish phone maker Nokia. About 12,500 of the jobs being eliminated will come from the Nokia groups, or from overlap at Microsoft resulting from the deal. Microsoft said 1,100 job cuts would come from Finland, and another 1,800 from a Nokia factory in Hungary.

That is about half the number of employees who joined Microsoft from Nokia a few months ago, when Microsoft completed its acquisition of Nokia’s mobile business. In related news, Microsoft said it would no longer make Nokia phones based on the Android operating system, switching its low-end phones to Microsoft’s Windows Phone software.

Continue reading the main story RELATED COVERAGE

•  documentDocument: Letter From Microsoft’s C.E.O. on Layoffs (Microsoft.com)
•  documentDocument: Letter From Stephen Elop, Nokia's Former Chief and Current Microsoft Executive (Microsoft.com)
•  
  Bits Blog: Finnish Pride Takes Another Blow From Microsoft Job Cuts JULY 17, 2014
•  
  Bits Blog: Large Round of Layoffs Expected at Microsoft JULY 16, 2014
•  
  Bits Blog: Satya Nadella Says Changes Are Coming to Microsoft JULY 10, 2014
•  
  Corner Office: Satya Nadella, Chief of Microsoft, on His New Role FEB. 20, 2014

Microsoft said it would take a charge of $1.1 billion to $1.6 billion to cover severance and related costs from the layoffs over the next year.

 

 

Microsoft's chief executive, Satya Nadella, signaled in a company memo last week that big organizational changes were coming. CreditRobert Galbraith/Reuters

On Thursday, Satya Nadella, the company’s chief executive, said in an email to employees announcing the job cuts that the layoffs are an effort to become more agile, a message he has given repeatedly since he took the job in February. “Having a clear focus is the start of the journey, not the end,” he said in the email. “The more difficult steps are creating the organization and culture to bring our ambitions to life.”

He added: “The first step to building the right organization for our ambitions is to realign our work force.”

The huge job cuts in the businesses it acquired from Nokia raise questions about Microsoft’s plans in the market for mobile devices. The acquisition, initiated by Steven A. Ballmer, Microsoft’s previous chief executive, greatly increased the company’s presence in the hardware business, which is outside its traditional expertise. The deal has been an unpopular one with investors and many people inside Microsoft.

“It is particularly important to recognize that the role of phones within Microsoft is different than it was within Nokia,” Stephen Elop, a former Nokia chief executive who now runs the devices group at Microsoft, said in an email to employees on Thursday. “Whereas the hardware business of phones within Nokia was an end unto itself, within Microsoft all our devices are intended to embody the finest of Microsoft’s digital work and digital life experiences, while accruing value to Microsoft’s overall strategy.”

After the initial announcement of Microsoft’s acquisition, Nokia employees and the wider Finnish community greeted the pending deal with growing pessimism, according to David J. Cord, an American based in Helsinki and the author of “The Decline and Fall of Nokia.”

Continue reading the main story

Microsoft's stock activity since Satya Nadella took over as its chief executive in February.

 

Mr. Cord said many of the best engineers from the handset business had already left the company. The exodus has left Microsoft’s new cellphone unit with many of the lesser well-trained engineers.

While Finland had once been known for its telecom prowess, many of the new generation of developers and engineers also have shunned corporate jobs with Nokia. Instead, they have turned to the country’s growing gaming industries. Companies like Supercell, which makes mobile games like Clash of Clans and is valued at around $3 billion, have gained global acclaim.

“Everyone had been expecting this news,” said Mr. Cord, in reference to Microsoft’s job cuts. “It has hurt the Finnish psyche. When Nokia was on top of the world, so was Finland. Now that Nokia has fallen, so has the country.”

Previously, the largest layoffs at the company were in 2009, when about 5,800 people were affected during the recession. Since then, Microsoft has had a few more rounds of job cuts, but the number of employees eliminated was typically in the dozens or hundreds.

In February, Mr. Nadella became the third chief of Microsoft as Mr. Ballmer stepped down, and Bill Gates, a company founder, left his role as chairman and become a technology adviser to Mr. Nadella. Microsoft was often criticized for being unfocused during Mr. Ballmer’s tenure, and for having a swelling product line and layers of bureaucracy.

Continue reading the main story Trimming of Tech Staffs

This year, several longtime technology leaders have begun or are expected to shed thousands of jobs to keep up with changes in the industry.

Company Jobs Portion of Work Force Hewlett-Packard 50,000 16% Microsoft 18,000 14% Intel 5,000 5% IBM 12,000 3%

Source: Company reports; Toni Sacconaghi, an analyst with Bernstein Research.

“Under the Ballmer era there were many layers of management and a plethora of expensive initiatives being funded that has thus hurt the strategic and financial position the company is in, especially in light of digesting the Nokia acquisition,” said Daniel Ives, an analyst at FBR Capital Markets, who called the cuts necessary.

Microsoft, a longtime leader in the technology industry, has struggled to find the same success in markets like mobile and Internet search that it did with personal computers. The company anticipated the rise of smartphones and tablet computers, but its products failed to capitalize on that foresight, and Apple and Samsung now dominate those markets.

Mr. Nadella signaled in a company memorandum last week that big organizational changes were coming soon. He sought to define his vision for Microsoft as a maker of productivity tools for a technology landscape shaped by cloud and mobile computing.

“We will increase the fluidity of information and ideas by taking actions to flatten the organization and develop leaner business processes,” he wrote in the memo. “Culture change means we will do things differently.”

Those statements were widely seen as foreshadowing some layoffs, and maybe even peeling off some business units. So far, Mr. Nadella has not dropped any major products or businesses.

Still, investors have welcomed his overtures. Shares have steadily risen since February, and added more than 5 percent in the last week as rumors swirled about the layoffs. They rose another 2.9 percent in early trading on Thursday.

Source: http://www.nytimes.com/2014/07/18/business/microsoft-to-cut-up-to-18000-jobs.html?_r=0

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Starting to Evolve Our Organization and Culture

July 17, 2014

 

inShare

 

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 Universal Apps.

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. 

Satya

 

[k2s]

Bye1

[tom bhayya]

bye1