Bombshell: Microsoft to Eliminate 18,000 Jobs in Restructuring
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Editor’s note: This story has been updated.
This morning, some seriously bad news for many Microsoft employees: CEO Satya Nadella emailed a note to employees explaining that the company will cut 18,000 jobs in the next year, the most ever in its history.
As part of a massive restructuring, the iconic Washington-based software maker is “moving now,” as in today, to cut the first 13,000 positions on the chopping block, Nadella wrote. The “vast majority” of the other positions will be “eliminated” over the next six months.
The layoffs, once complete, will eliminate slightly more than 14 percent of Microsoft’s 127,100-employee workforce, 61,313 of whom are based in the United States.
Professional and factory employees from Nokia’s handset business, which Microsoft acquired in April, are expected to account for some 12,500 of the total cuts -- exactly half of those added in the acquisition. Other positions being eliminated are in engineering, marketing and sales. Severance packages will be offered to employees who receive a pink slip, Nadella noted.
Meanwhile, Microsoft shares rose 3.3 percent to $45.55 a share in premarket trading, on the news.
Nadella, who took the reins from Steve Ballmer in February, is making the mass cuts as part of a larger plan to “evolve our organization and culture.” Specifically, he said Microsoft’s workforce reductions “are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.”
FBR Capital Markets analyst Daniel Ives told USA Today that Microsoft’s “larger than expected” job reductions speak to Nadella’s wider ambitions to streamline the company’s overall infrastructure, and to jockey for position in the mobile and cloud markets.
In a rambling, 3,100-word mission statement issued earlier this week, Nadella hinted at a few key organizational shifts, including “fundamental cultural changes.” His long-winded treatise sparked rumors of looming widespread layoffs.
Apparently it’s not all grim news out of Redmond today, however. As jobs are taken away, new ones will be added, Nadella said. Precisely how many is not yet clear.
“It’s important to note that while we are eliminating roles in some areas, we are adding roles in other strategic areas,” Nadella wrote. “My promise to you is that we will go through this process in the most thoughtful and transparent way possible."
Nadella said he will further detail the sweeping restructuring plan on July 22, during Microsoft’s earnings call.
Microsoft’s last major round of layoffs occurred over the course of 2009, when 5,800 jobs were cut. In 2012, the company eliminated hundreds of positions in marketing and advertising sales.