Bombshell: Microsoft to Eliminate 18,000 Jobs in Restructuring

The ax just fell at the tech giant, deeper than it ever has before.

learn more about Kim Lachance Shandrow

By Kim Lachance Shandrow • Jul 7, 2014 Originally published Jul 7, 2014

Opinions expressed by Entrepreneur contributors are their own.

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.

Related: Microsoft Reportedly Prepping Massive Round of Layoffs

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."

Related: Wait, What? Microsoft CEO Says Company Needs to Rediscover Its Soul

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.

Related: Satya Nadella Proves Even Giants Can Pivot

"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.

Related: Microsoft's Nadella Envisions Cultural Shift Where Data is King

Kim Lachance Shandrow

Former West Coast Editor

Kim Lachance Shandrow is the former West Coast editor at Entrepreneur.com. Previously, she was a commerce columnist at Los Angeles CityBeat, a news producer at MSNBC and KNBC in Los Angeles and a frequent contributor to the Los Angeles Times. She has also written for Government Technology magazine, LA Yoga magazine, the Lowell Sun newspaper, HealthCentral.com, PsychCentral.com and the former U.S. Surgeon General, Dr. C. Everett Coop. Follow her on Twitter at @Lashandrow. You can also follow her on Facebook here

Related Topics

Editor's Pick

This Co-Founder Was Kicked Out of Retailers for Pitching a 'Taboo' Beauty Product. Now, Her Multi-Million-Dollar Company Sells It for More Than $20 an Ounce.
Have You Ever Obsessed Over 'What If'? According to Scientists, You Don't Actually Know What Would Have Fixed Everything.
Most People Don't Know These 2 Things Are Resume Red Flags. A Career Expert Reveals How to Work Around Them.
Business News

Survey: A Majority of Americans Are Living Paycheck to Paycheck

Sixty-four percent of U.S. consumers live paycheck to paycheck — even those who earn more than $100,000 a year.

Business Ideas

55 Small Business Ideas To Start Right Now

To start one of these home-based businesses, you don't need a lot of funding -- just energy, passion and the drive to succeed.

Business Solutions

5 Procurement Trends To Keep on Your Radar for 2023

Procurement professionals must adapt to inflation and a shortage of skilled labor in the face of an economic recession. Investing in a workforce paired with retraining and development strategies will put your company on top amid economic uncertainty.

Business News

Massive Fire At Top Egg Farm Leaves Estimated 100,000 Hens Dead. What Does This Mean For Egg Prices?

Hillandale Farms in Bozrah, Connecticut went up in flames on Saturday in an incident that is still under investigation.

Marketing

How Promotional Pricing Devalues Your Brand

Promotional pricing and discount pricing strategies can cost brands millions in lost sales by promoting unprofitable buying behavior. This article will discuss the long-term impact discounts can have on a brand.

Business News

'This Just Can't Be for Real': Fyre Festival Fraudster Billy McFarland is Now Hiring For His New Tech Company -- And He's Already Selling Merch

McFarland was released from house arrest last September and is currently being ordered to pay $26 million in restitution to fraud victims.