microsoft job cuts
Sam Yeh, AFP/Getty Images
By Ron Grover and Bill Rigby

SEATTLE -- Microsoft (MSFT) said Thursday it will slash up to 18,000 jobs, or 14 percent of its workforce, this year as it trims its newly acquired Nokia phone business and reshapes itself into a cloud-computing and mobile-friendly software company.

The larger-than-expected cuts are the deepest in the company's 39-year history and come five months into the tenure of Chief Executive Satya Nadella, who outlined plans for a "leaner" business in a public memo to employees last week.

"We will simplify the way we work to drive greater accountability, become more agile and move faster," Nadella wrote to employees in a memo made public early Thursday. "We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making."

The size of the cuts were welcomed by Wall Street, which viewed Microsoft as bloated under previous CEO Steve Ballmer, topping 127,000 in headcount after absorbing Nokia earlier this year.

"This is about double what the Street was expecting," said Daniel Ives, an analyst at FBR Capital Markets. "Nadella is clearing the decks for the new fiscal year. He is cleaning up part of the mess that Ballmer left."

Stock Gains

Microsoft shares jumped 3 percent to $45.40 in early trading, reaching their highest since the technology stock boom of 2000.

About 12,500 of the layoffs will come from eliminating overlaps with the Nokia unit, which Microsoft acquired in April for $7.2 billion. Microsoft didn't say how many jobs would come from Nokia and how many from existing operations. The acquisition of Nokia's handset business in April added 25,000 people to Microsoft, pushing its overall headcount up to 127,000.

The Nokia-related cuts were widely expected. Microsoft said when it struck the deal that it would cut $600 million per year in costs within 18 months of closing the acquisition.

Microsoft didn't detail exactly where the remaining jobs would be cut, but said the first wave of layoffs would affect 1,351 jobs in the Seattle area.

The company said it expects to take pretax charges of $1.1 billion to $1.6 billion over the next four quarters to account for the costs of the layoffs.

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

The new CEO's moves are designed to help Microsoft shift from being a primarily software-focused company to one that sells online services, apps and devices it hopes will make people and businesses more productive. Nadella needs to make Microsoft a stronger competitor to Google (GOOG) and Apple (AAPL), 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 now slimming down to adapt to the Web-focused world.

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

IBM (IBM) 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.

Chipmaker Intel (INTC) and network equipment maker Cisco Systems (CSCO) both said in the past year they were cutting about 5 percent of their staffs.


Microsoft To Cut Workforce By 18,000 This Year, 'Moving Now' To Cut First 13,000

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hsenpfeffer

The economy will not improve till we shed the grotesque overhead of salestrash and finance scammers that burdens our economy. Tens of thousands of wall street scammers should have been sent to prison for their frauds after the 2008 collapse and bailout. Till that happens nothing will improve. We cannot afford to continue to support the vast numbers of salestrash parasites who do nothing but inflate costs and prices. That includes all the finance salestrash kiting paper to skim profit from productive endevour, the real estate salestrash driving up the price of homes to grub commissions for nothing, the insurance scammers living in luxury while producing nothing. We cannot ever be competitive with all of this dead weight.

July 18 2014 at 11:53 AM Report abuse rate up rate down Reply
Iselin007

One of my Great grand fathers had a brother Thomas, a Patriot that knew General George Washington personally. George Washington became the first President of the United States.

I say the above because it is true and not a lie like NAFTA and China trade deals that destroyed more jobs than they created.

July 18 2014 at 11:12 AM Report abuse rate up rate down Reply
npaleorelic

One of the problems with our business profit mentality is that no amount of profit is ever enough....the desire for more and more exhorbinant profit never wavers. There is no real sense of sharing a little of the wealth with employees. WalMart profited $ 17 billion and yet their employees relied upon $2 billion in government assistance to make ends meet. I understand economics and that some profits are being funneled around into Uncle Sam's pockets and multiple programs but hey....can't we find some happy medium about profits so everyone benifits who is part of the corporation.

July 18 2014 at 11:00 AM Report abuse +1 rate up rate down Reply
2 replies to npaleorelic's comment
Iselin007

Bet you did not know the Chain was a US Goverment Contractor well at least they were in 2004.

July 18 2014 at 11:23 AM Report abuse rate up rate down Reply
John Krikorian

Would you feel the same if I told you your 401K has shares of Walmart and because their profits are up so is YOUR net worth. Sounds like you don't care....well a lot of people rely on their 401k going up so they have money when they retire. Look at the world for what it is and always will be. We are all motivated by money, that is why we work. The more the better. The only ones that want to reduce wealth and share it are the ones that do not have it.......The land of Oppurtunity .... NOT HANDOUTS !!!!!!!

July 18 2014 at 1:15 PM Report abuse rate up rate down Reply
strykers650

That should help the west coast property values. At least many of these are most likely highly compensated and were smart enough not to buy lavish cars and pay $300+/sf for their residences. All should work out well.

July 18 2014 at 10:33 AM Report abuse rate up rate down Reply
progressivehoax

Another consequence of the Lieberalconomy

July 18 2014 at 10:23 AM Report abuse -1 rate up rate down Reply
whelaniii

More jobs lost,Thank you Mr. Obama for all the jobs you promised during you campaining, What a joker you are. Lets hope in 2016 we elect a LEADER instead of a campainer and joker

July 18 2014 at 9:34 AM Report abuse rate up rate down Reply
3 replies to whelaniii's comment
iluvhoney

this is the way business and industry works ...profits go up on the backs of employees via job losses...productivity doesn't suffer because if you can't do the job of the 3 or 4 people that were fired ..then go somewhere else because there are 20 other people that want your job ...experience means nothing ...upper management will continue getting outrageous salaries and bonuses and will be lauded for layoffs...the stockholders benefit the most ...what everybody should do when coming out of college and getting lucky enough to land a job with any of these technology companies or any other giant company is immrediately start buying stock in the company on a monthly basis ..so when you are fired you will at least have accumulated a nice nest egg of stock and it softens the blow of the firing ...what business today is doing this is simple economic sense ..if you had a business that employs 10 people ...you let 5 go and have the 5 remaining people do the job of the 10 you let go ..you can keep hiring and firing to meet production goals ..grow your business..make nice profits...it may sound hard and cynical and hurt the middle class...because it does ..but such is the way of the world ..so everyone has to adjust and you the worker have to figure out how to live in this type business environment ....instead of buying that $400,000 house that you can afford based on your salary ...buy one for $250,000 so that when you get fired you can still survive and keep your house ...in time maybe not in most of our lifetime things will improve but just like business we all have to downsize too to survive in this non-friendly business environment..this is capitalism at its finest ..there is no better economic system ever devised but everyone has to adjust ... all those lost manufacturing jobs are never coming back ...even if we tried to give corporate tax cuts ..or any other incentive to companies to build factories here again it will not happen ..because the cost of american labor with benefits will always exceed foreign labor because you don't have to pay any benefits nor employ people to service the benefits...so again ,bottom line is adjust to the present because it is not going to get any better ..good luck all ..

July 18 2014 at 9:21 AM Report abuse -1 rate up rate down Reply
1 reply to iluvhoney's comment
skyman83d

The money saved is rarely used to grow the company. It goes into the wallets of the FAT at the top.

July 18 2014 at 9:30 AM Report abuse +3 rate up rate down Reply
2 replies to skyman83d's comment
strykers650

Buffet just gave away 2 billion to the Gates fund. Chump change, LOL. Still, you have to ask what the general workers under him received for compensation. If it was stock, they did well on the backside. Unfortunately, the lower level employees are meant to be serfs and do menial tasks. Even your goat and grape farms work the same way. Not everyone can be a millionaire or billionaire.
Publicly traded companies need investor cash. You want it to change, don't fund the FAT at the top. Stop buying their stock and any mutual fund that may own them.

July 18 2014 at 10:41 AM Report abuse rate up rate down
Iselin007

Current use of the stock market is a sham. The majority of money invested does not go to grow a company in the US it goes to benefit the company off shore! Of course the stock market has been around before it was ever in the US but our share of the stock market tries to escape anything that's domestic!

July 18 2014 at 10:47 AM Report abuse rate up rate down
Iselin007

Interesting how last night the link to this board went to a much older past thread. With that in mind it's an example of why they need to export or repatriat the visa workers.

July 18 2014 at 9:21 AM Report abuse +2 rate up rate down Reply
ectullis

Hey BHOzo what is the REAL unemployment rate?

July 18 2014 at 9:13 AM Report abuse -2 rate up rate down Reply
Captain Jack

Another example of POS obama's economic plan

July 18 2014 at 9:12 AM Report abuse +1 rate up rate down Reply
1 reply to Captain Jack's comment
The Canoli King

And this RACIST CLOWN in charge, Bulls***'s the nation that employment numbers are up. Yep,up on the minus side. Has he done anything worth a f**? Mr. photo-ops. The GREATEST Shucker & JIIVER,Bobber & Weaver of all times. This ONCE GREAT NATION has had a belly full of his oratory as well.

July 18 2014 at 9:18 AM Report abuse -1 rate up rate down Reply
1 reply to The Canoli King's comment
hsenpfeffer

Speaking of racists it is cr ap like you that caused the problem and all you can do is throw racist insults. Now go back to your klavern meeting and shut up when adults are in the room.

July 18 2014 at 9:52 AM Report abuse +1 rate up rate down