Microsoft layoffs of 18,000 employees begin

Microsoft is cutting 18,000 jobs, including 12,500 associated with the Nokia handset and services business it acquired earlier this year.
Written by Mary Jo Foley, Senior Contributing Editor

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."

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