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Microsoft CEO says company will cut 18,000 jobs in the next year

Satya Nadella - Contributed photo
Satya Nadella
— image credit: Contributed photo

Staff Report

Microsoft chief executive officer Satya Nadella issued a memo to workers on Thursday morning, noting that the company will eliminate 18,000 jobs in the next year.

"The first step to building the right organization for our ambitions is to realign our workforce," he wrote.

Microsoft's work toward synergies and strategic alignment on Nokia Devices and Services (acquired by Microsoft on April 25) is expected to account for about 12,500 jobs, comprising both professional and factory workers.

The company is in the beginning stage of reducing the first 13,000 positions, and most of those employees who will be affected will receive notification over the next six months. Microsoft expects the reduction plan to be fully completed by June 30, 2015.

"It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible," Nadella wrote. "We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company."

According to a press release, the company expects to incur pre-tax charges of $1.1 billion to $1.6 billion over the next four quarters, including $750 million to $800 million for severance and related benefit costs, and $350 million to $800 million of asset-related charges.

The CEO will hold an employee question-and-answer meeting Friday on Microsoft's Redmond campus.

Microsoft Executive Vice President Stephen Elop wrote in an employee memo that Microsoft operates in a competitive industry that moves rapidly, and change is necessary.

"As difficult as some of our changes are today, this direction deliberately aligns our work with the cross-company efforts that Satya has described in his recent emails," Elop added. "Collectively, the clarity, focus and alignment across the company, and the opportunity to deliver the results of that work into the hands of people, will allow us to increase our success in the future."

Nadella sent another memo to employees on July 10, alluding to possible layoffs this month.

Titled "Bold Ambition & Our Core," Nadella's memo said that on July 22, he'll announce earnings results for the past quarter and what company officials are planning in the fiscal year 2015 to focus on their core.

"Over the course of July, the Senior Leadership Team and I will share more on the engineering and organization changes we believe are needed," he added in the memo.

"Our ambitions are bold and so must be our desire to change and evolve our culture," he wrote. "Nothing is off the table in how we think about shifting our culture to deliver on this core strategy."

Nadella — who replaced Steve Ballmer in February — noted later in the memo that "every team across Microsoft must find ways to simplify and move faster, more efficiently" and that "I am committed to making Microsoft the best place for smart, curious, ambitious people to do their best work."

According to a Bloomberg report, some of the job cuts could be in marketing departments for businesses such as the global Xbox team; the European Xbox team is based in Reading, U.K.

Also, according to Reuters via Microsoft-News.com, a Finnish newspaper reported that Microsoft is planning to cut 1,000 jobs in Finland, where it acquired thousands of employees via the Nokia acquisition. Microsoft currently has 4,700 employees in Finland.

In 2009, Microsoft cut 5,800 jobs.

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