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Microsoft To Lay Off 18,000, Including 50% of Nokia Workers
Microsoft To Lay Off 18,000, Including 50% of Nokia Workers

By Barry Levine
July 17, 2014 10:52AM

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The 18,000 Microsoft job cuts will be made in the sales, engineering and marketing departments, and are expected to be "substantially complete" by the end of this year and "fully completed" by June 30 of next year. Microsoft said in a statement that the pretax charge for the layoffs would be between $1.1 billion and $1.6 billion.

The boom has been lowered in Redmond. Following persistent rumors that Microsoft could lay off more people than the previous record of 5,800, the company said Thursday it would eliminate as many as 18,000 jobs.

About 12,500 will come from the 25,000 Nokia employees worldwide that Microsoft is adding with its purchase of that company.

"Of the total [18,000]," the tech giant said in a statement, "about 12,500 professional and factory positions will be eliminated through synergies and strategic alignment of the Nokia Devices and Services business."

By June 30

Including the Nokia employees, the 18,000 layoffs represent the largest employee cuts in the company's history. In 2009, it reduced its workforce by 5,800. Before the cuts announced Thursday, Microsoft employed slightly more than 127,000 workers, including Nokia's.

The reductions will be made in the sales, engineering and marketing departments, and are expected to be "substantially complete" by the end of this year and "fully completed" by June 30 of next year. The company said in a statement that the pretax charge will be between $1.1 billion and $1.6 billion, including $750 million to $800 million in severance and related benefit costs, and $350 million to $800 million in asset-related charges.

The layoffs were relayed to Microsoft employees in an e-mail sent by CEO Satya Nadella, as well as an e-mail from Vice President Stephen Elop to Microsoft Devices Group employees. Elop is the former head of Nokia.

Not 'Terribly Surprising'

"It's important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas," Nadella wrote.

Michael Silver, vice president at industry research firm Gartner, told us he didn't "think those numbers are terribly surprising." He added that the "Nokia ones were inevitable."

"One important thing that's not clear," he said, "is whether the number is 18,000 layoffs or 18,000 net reductions," including hiring new people "with different skills than the ones that are leaving."

In his e-mail, Nadella promised that the company "will go through this process in the most thoughtful and transparent way possible." He added that severance will be offered to all employees "impacted by these changes, as well as job transition help in many locations."

'Two Outcomes'

He also noted that the "workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment."

The smaller workforce, he said, will allow Microsoft to "become more agile and move faster," with fewer layers of management so that information and decision making can be accelerated.

In his e-mail, Elop said the former Smart Devices and Mobile Phones business units will be consolidated "into one phone business unit that is responsible for all of our phone efforts." He also said that engineering units will be concentrated in Salo, Finland, "for future, high-end Lumia products" and in Tampere, Finland, "for more affordable devices."

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