Microsoft to slash 18,000 jobs in deepest cuts in tech giant's history

Most of the job losses expected to come from firm's Nokia unit, which Microsoft acquired in April for $7.2bn Microsoft will cut up to 18,000 jobs over the next year as it absorbs its newly acquired Nokia phone business, the company announced on Thursday.

The cuts amount to 14% of Microsoft's global workforce, and represent the deepest in the tech giant's 39-year history. They 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.

Most of the positions come from Nokia, which Microsoft acquired in April for $7.2bn, pushing up the company's total headcount by 25%, to 127,000. Before Thursday's announcement, the largest round of layoffs in Microsoft history was in 2009, when it cut 5,800 employees.

“My promise to you is that we will go through this process in the most thoughtful and transparent way possible,” Nadella said in an open letter on Thursday.

Microsoft said about 12,500 professional and factory workers will be cut from Nokia's devices and services division. About 13,000 are expected to receive notifications in the next six months, Nadella said. All will receive severance pay; some will receive job placement services.

It's not clear where, globally, the job cuts would come from. When Nokia was acquired by Microsoft, the Finnish phonemaker operated 130 sites in 50 countries. Including those, Microsoft runs 717 sites across 114 countries.

Nadella said the cuts represent the fact that Microsoft is starting to absorb Nokia into the larger organisation. “It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas,” said Nadella. He did not offer details about what new positions might be added.

Former Microsoft chief executive Steve Ballmer initiated Nokia's acquisition in September, moving the company into mobile devices, an area that has not traditionally been a strong one for Microsoft.

In April, Nadella and Nokia's former chief executive Stephen Elop emphasized growth in emerging markets, looking to provide the "next billion" people to buy their first phones – a prize worth $50bn per year, they said.

"The vast majority of people do not have, nor will they ever have a personal computer," Elop, who is now Microsoft's vice-president for devices, said. "And so there are literally billions of people who can be exposed to Microsoft for the very first time.”

Nadella took the reins from Steve Ballmer in February, and wrote last week's 3,200-word letter to employees that emphasized cloud computing and mobile devices. Many saw the memo as foreshadowing layoffs, but the size of the cuts was unexpected. Analysts predicted more than 6,000 job cuts, but nowhere near 18,000.

Employees can expect more detailed information from the company Thursday afternoon. More details about the company’s realignment are expected Thursday afternoon and during a public earnings call on 22 July. Microsoft's stock has risen steadily over the last month, including on Thursday following the announcement.


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