What could be the deepest job cuts in the company’s 39-year history come five months into the tenure of Chief Executive Officer Satya Nadella, who outlined plans for a “leaner” business in a public memo to employees last week.
Many of the cuts are expected to come from the Nokia unit, which Microsoft acquired in April for $7.2 billion, pushing up Microsoft’s headcount by a quarter to 127,000. Microsoft said when it struck the deal to buy the Finnish phone maker that it would cut $600 million per year in costs within 18 months of closing the acquisition.
Microsoft is also expected to trim staffing at its Xbox game and entertainment unit, which Nadella last week praised but stopped short of describing as a “core” business.
Nadella’s cuts are set to be the biggest at the Redmond, Washington-based company since his predecessor Steve Ballmer axed 5,800, or about 6 per cent of headcount at that time, in the depths of recession in early 2009.
The new CEO’s move is designed to help Microsoft shift from being a primarily software-focused company to one that sells online services, apps and devices that it hopes will make people and businesses more productive. Nadella needs to make Microsoft a stronger competitor to Google Inc and Apple Inc, 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 that are now slimming down as they adapt to the Web-focused world.
PC-maker Hewlett-Packard Co is in the midst of a radical three-to-five-year plan that will lop up to 50,000 of its 250,000 staff.
International Business Machines is undergoing a “workforce rebalancing,” which analysts say could mean 13,000, or about 3 per cent of its staff, being laid off or transferred to new owners as units are sold.
Chip maker Intel Corp and network equipment maker Cisco Systems Inc both said in the past year they are cutting around 5 per cent of their staff.