Microsoft layoffs of 18,000 employees begin

Microsoft layoffs of 18,000 employees begin

Summary: Microsoft is cutting 18,000 jobs, including 12,500 associated with the Nokia handset and services business it acquired earlier this year.

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Microsoft is eliminating 18,000 jobs over the next year, including about 12,500 associated with the Nokia Devices and Services team it acquired earlier this year, company officials announced on July 17.

Microsoft also announced today that the company will incur pre-tax charges of $1.1 billion to $1.6 billion for severance and related benefits costs and asset related charges over the next four quarters.

The cuts will begin with a first wave of 13,000, with the vast majority of employees whose jobs will be eliminated being notified over the next six months, according to a memo from CEO Satya Nadella.

Those Nokia jobs that are being eliminated will include both professionals and factory workers.

Reports about Microsoft management's plans to cut jobs as part of an effort to reduce redundancies and eliminate some engineers who aren't developers have been circulating for the past month and intensifying in the past week. A July 9 memo about Microsoft's fiscal 2015 priorities from CEO Satya Nadella hinted about changes that might occur as a result of new priorities and corporate realignment. Nadella declined to comment on layoff plans when asked by reporters who were allowed to speak with him last week about his memo, however.

This week's layoffs are expected to hit almost all groups across the nearly 130,000-person company across the world and to include not only the aforementioned engineers who aren't developers, but also a number of employees in sales and marketing in many groups, according to my and other reporters' sources.

Microsoft officials planned to start to notify those in the US who are affected on July 17. A company-wide town meeting about the layoffs is scheduled for Friday, July 18.

Few, if any, entire product groups or teams are expected to be eliminated completely in the current layoff scheme, according to my sources. However, I am hearing that Microsoft is evolving the team that has been working on the Android-based Nokia X phones to drop Android and refocus on the Windows Phone OS. Update: Microsoft is confirming this is the plan, noting that current Nokia X phones will continue to be supported.

Microsoft is set to announce its fourth-quarter fiscal 2014 earnings next week, on Tuesday, July 22. (The announcement is on Tuesday rather than Microsoft's customary Thursday reporting date due to a scheduling conflict with CEO Nadella, who is speaking at MGX, Microsoft's global sales conference next Thursday in Atlanta.)

Microsoft's last major round of layoffs occured in 2009, when management eliminated 5,800 positions over the course of two-plus rounds. Then-CEO Steve Ballmer attributed the cuts in 2009 to a "response to the global economic downturn."

See also:

Topics: CXO, Microsoft, Leadership, Windows Phone

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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93 comments
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  • Mary Jo there's a typo "majjority"

    -
    Minh_T
    • And the article states that the first wave of cuts will be 13,000

      Should this figure be 1,300? As the article goes on to state that "with the vast majority of employees whose jobs will be eliminated being notified over the next six months".

      In any case, waiting six months for the axe to fall will be a most unpleasant experience for Microsoft employees.
      Rabid Howler Monkey
      • Agreed.

        "In any case, waiting six months for the axe to fall will be a most unpleasant experience for Microsoft employees."

        Having been an employee of two companies which had been acquired I can say the uncertainty of losing ones job was always in the back of my mind. While I did my best to be as productive as possible it's difficult knowing the hammer could drop at any time. Better to do it sooner instead of spreading it out over time.
        ye
        • Unfortunately.

          Sometimes no matter how "productive as possible" you are, you become redundant. I can see all the Former Nokia employees getting the boot, as now Foxconn designs, and builds 100% of Nokia's cellphone lines. It started with the "Lumia" series, but now has spread to all lines.
          I hate trolls also
          • My comment about being productive wasn't...

            ...a reference to make myself more invaluable and therefore avoiding being laid off. I've learned those decisions are made regardless how productive (or not) an employee is (or is not). It was made wrt not knowing if you were on the chopping block. While I firmly believe in always doing the best I can, even if I've been notified I'll be let go, it's difficult to focus when you're worried about losing your job.
            ye
          • I've worked my entire life.

            Trying to be the most valuable person in my department. Unfortunately, corporate brown nosing trumps productivity just sabot every time. That's a comment on the sad state of employment, in general, rather than on any one company.
            I hate trolls also
          • Foxconn doesn't design Nokia phones.

            though rumor has it they designed the iPhone from 4 on up.
            William.Farrel
          • It's a fact

            Nokia shipped the design and manufacturing to Foxconn, when Elop took over. It was part of his grand plan to devaluate the company, ahead of the Microsoft take-over. But you still are free to Lie about things, until Shariah law is declared lol.
            I hate trolls also
          • Just to prove a point

            Foxconn India's Chennai facility is the facility where they make Nokia branded phones.
            I hate trolls also
        • And that is whose fault?

          Their fault. I wouldn't go to work for some companies without planning on not being there long. One is Dell (I live in Austin), another is Microsoft...
          villandra
          • Whose fault is what?

            Who are you referring to?
            ye
        • Redundancy is actually a great way to leave a company.

          Microsoft is a great place to work. You get to surround yourself with inspired people. And they look after you well. So it is understandable that you'd want to remain there.

          However people change companies all the time. If you are going to leave, what could be better to be paid in advance to NOT show up at work. Being made redundant is actually pretty cool.
          And often in a large company like Microsoft, if you wait a little while, new positions open up. You can apply & rejoin the company again. Result: you get a holiday, get to pay down your mortgage, maybe gained more experience & perspective in another company.
          I stress, redundancy is very different from getting fired for being a poor performer. While you would think it logical that a company would use the excuse to cull the weaker people. I've seen strong evidence to the contrary. So if it happens to you, don't take it as a slap in the face. You could be a great CIO, but after a merger, the new company only has room for one.
          DavidLean2
          • My comment is wrt not knowing.

            nt
            ye
      • I am sure that most of those on the bubble already have a good idea who ...

        ... they are and why. The article says Microsoft is writing-off $1.1 to $1.6 billion in severance expenses ($61,ooo to $89,000 per person). That's pretty generous.
        M Wagner
        • Not going to employees though

          The gross figure is a composite number and includes other items besides severance.

          I don't know MSFT severance policy. Perhaps 2 weeks plus a week for each year of service. In some industries that is used, but I have no idea what the software industry "norm" is.

          Any ideas from those who have gone throught something like this?
          DaveLG526
          • The severance package varies...

            ...from country to country, depending on local labour laws. Also, the laws may be different for factory workers and office staff. On top of that variation, Microsoft may have its own variations in policy. For example, the legal minimum for (say) India may be 15 days of salary for every completed year of service, but Microsoft India may choose to payout a full month's salary to all employees who've been working for more than 5 years.

            But in general, yes, Microsoft is known to be generous with severance packages - which I know from personal experience just 10 months ago!
            jaykayess
        • Microsoft layoffs

          M Wagner you must really live in cloud cuckoo land as well as being a crawling syscophant for Microsoft. Do you relly think that everyone made redundant will get £61 to $89K dream on you really have been brainwashed.
          bobmattfran
      • Yep but there is an upside

        Yep the not knowing for sure is anxiety at its worst. Use the time to start looking for a new position elsewhere while being paid.

        It is always easier to get a new position while employed.
        DaveLG526
  • Layoff categories

    "reduce redundancies and eliminate some engineers who aren't developers" -- Of course this is a good plan for a software company, just surprised there are so many that fit into these categories. I believe they are still hiring software developers.
    Sean Foley
    • Yeah

      All you need is some code monkeys.

      Might explain why so much of their latest software is bug heavy......
      Boothy_p