Microsoft to cut 18,000 jobs; focus on smartphone work capabilities

Redmond, Wash. - Microsoft Corp. is enacting a restructuring plan to simplify its organization and align the recently acquired Nokia mobile devices and services business with the company’s overall strategy. These steps will result in the elimination of up to 18,000 positions in the next year.

Of the total, about 12,500 professional and factory positions will be eliminated through synergies and strategic alignment of the Nokia devices and services business acquired by Microsoft on April 25. The actions associated with the plan are expected to be substantially complete by Dec. 31, 2014, and fully completed by June 30, 2015.

In an email to employees explaining the move, Microsoft CEO Satya Nadella said the job cuts are part of an effort to “drive greater accountability, become more agile and move faster.” This will include fewer layers of management, a flattened organization and greater control span for managers who remain.

In addition, Nadella said Microsoft will “focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences” in its smartphone segment. Given the recent announcement that Apple will soon offer IBM analytical technology on its iPhones to make them more substantial work devices, it should be interesting to watch what Microsoft does in the burgeoning market for smartphones as professional tools.

The company expects to incur pre-tax charges of $1.1 billion to $1.6 billion during the next four quarters, including $750 million to $800 million for severance and related benefit costs, and $350 million to $800 million of asset-related charges.

 

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