​Microsoft Layoffs Begin Strategic Direction For Company

Author: Rob AdamsBy:
Staff Reporter
Oct, 30, 2014 | 4:32 PM

Microsoft completes a third round of layoffs, finishing the 18,000 job cuts it announced last summer, but analysts remain skeptical.

Microsoft cut 13,000 employees in July, according to Yahoo Finance. Nearly all of them, 12,500, were from Nokia, which would leave about another 5,000 employees to cut. In September, Microsoft let go about 2,100 employees.

“We’ve taken another step that will complete almost all the 18,000 reductions announced in July. The reductions happening today are spread across many different business units, and many different countries.”

The Microsoft layoffs impacted Nokia employees, for the most part. The tech giant purchased the Finnish company’s handset business for $7.5 billion in April. It then scrapped the Nokia X Android phones, shifting them to become Lumia products running Windows. The rest of the cuts were part of a strategic shift in direction.

The work-force reductions took place across a variety of teams in many different countries, according to USA Today. There’s no word as to which departments were hit the hardest. CEO Satya Nadella is trying to simplify the company, with a flatter organization with fewer layers of management.

The 18,000 employees who have lost their jobs represent about 14% of Microsoft’s overall staff. Of the 3,000 let go Wednesday, 638 were in the Seattle area where Microsoft is based. This number was much lower than what analysts expected.

It’s not clear whether Microsoft took any of that advice into account, but clearly at some point recently it decided to get the layoffs over with sooner rather than later.

In its first fiscal quarter, ended Sept. 30, Microsoft grew its revenue 25 percent. But its profits dropped, dragged down by $1.14 billion in integration and restructuring charges related to the layoffs and to the Nokia business integration, which lopped off $0.11 per share in earnings. The company still managed to beat Wall Street’s earnings per share expectations by $0.05.

Some critics claim the it was unwise to continue with the Microsoft layoffs, saying it would prolong uncertainty among employees, drag down staff morale. There are complaints that change is happening too quickly, Tech Crunch notes. Investors worry about bad press for the company.

Prior to the Microsoft layoffs, Steve Ballmer, the predecessor of current CEO Satya Nadella, brokered the Nokia acquisition. In public statements Nadella has tempered Ballmer’s enthusiasm about turning Microsoft into an Apple-like maker of tightly integrated devices and software. However, they don’t want to be in the hardware business, but aligned as a productivity and platform company.

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