Microsoft's latest job cuts to hit manufacturing, sales

MIcrosoft's Finland offices and its Sales and Marketing Organization will both be impacted by the company's 7,800 job cuts. Here's COO Kevin Turner's mail to the troops.
Written by Mary Jo Foley, Senior Contributing Editor

Microsoft officials aren't sharing many specifics about which job functions and geographies will be hit hardest by the coming layoffs of 7,800 announced today, beyond saying the bulk of the cuts will affect Windows Phone hardware.

Microsoft's Salo offices in Finland
But there are a few more details trickling out.

Microsoft will lay off more than half of the Microsoft staffers based in Finland, the home of Nokia, as reported by Yle. That means a maximum of 2,300 jobs will be cut in Finland "as the company shuts down its Salo operation and moves tasks from there to Microsoft facilities in Tampere and Espoo," according to Yle. Currently, there are 3,200 Microsoft employees in Finland, Yle said.

A Microsoft spokesperson confirmed that this report is correct.

Salo, where Microsoft had been manufacturing Lumia phones, was also hit hard in last year's round of layoffs. One of my contacts said that Microsoft also plans to close San Diego and some of its Beijing facilities involved with Windows Phone hardware.

It seems that Microsoft marketing and sales also will be hit with cuts as part of the layoffs. Again, Microsoft officials are not specifying how many of the 7,800 cuts will be in manufacturing vs. design, engineering and sales/marketing.

An e-mail memo from Microsoft's Chief Operating Officer Kevin Turner to the troops sent today, July 8, notes there will be some "direct impact" on Microsoft SMS&G (Sales, Marketing and Services Group). There may be additional "reductions" in SMS&G coming around the world in Microsoft's fiscal 2016 (which runs from July 1, 2015 to June 30, 2016) -- as a result of the phone-hardware cuts, as well as Microsoft's recent moves to pull back from the display ad business -- Turner noted.

Turner told employees that Microsoft "will also focus on the channels and markets that offer the best returns," going forward with Windows Phone. "This is a similar approach to the one we have taken with Surface, which has been very successful," he said in his e-mail.

Bloomberg Business Week's Dina Bass tweeted today that she was told Microsoft will be narrowing its carrier/geography focus with Windows Phone by exiting relationships and areas where it has not been successful. Bass noted, however, that Microsoft is still planning to continue to offer devices in the U.S., where its share and carrier relationships have been less than stellar.

Turner also mentioned some organizational changes resulting from Microsoft's display-ad exit in today's e-mail. One of those changes is that Rik van der Kooi will be moving from Microsoft's Applications and Services Group to Turner's organization, taking with him Microsoft's search-ad team.

Here's Turner's e-mail:

From: Kevin Turner

Sent: Wednesday, July 08, 2015 9:43 AM

Subject: FW: Sharpening our focus

This morning, Satya explained the new strategic direction for our family of devices and some changes that result from the display advertising news shared last week. Both of these changes further align our business and transformation initiatives as a company, but they also may have a direct impact on some of our SMSG employees. These situations are never easy, and we are committed to doing everything we can to help our impacted team members through these transitions with the utmost care, dignity, and respect.

To align with our new strategy to enhance the Windows device ecosystem, we are integrating Microsoft Mobile Device Sales (MMDS) underneath the Consumer Channels Group (CCG). Our CCG organization will continue to be led by Jude Buckley, and Chris Weber will continue leading our MMDS team reporting to Jude. Going forward, we will focus on building the very best Windows phones on a quicker timeline. We will also focus on the channels and markets that offer the best returns. This is a similar approach to the one we have taken with Surface, which has been very successful. Phones remain a critical component of the Microsoft device portfolio and an important piece of our mobility strategy, but a restructuring is in order.

In the advertising business, our recent partnerships with Yahoo!, AOL, and AppNexus will allow us to focus on our Bing search advertising strength. As a result, we are changing our organizational structure to better align our business and set us up for success. Going forward, Frank Holland will run the Display Advertising organization. Rik van der Kooi will move to SMSG, reporting directly to me. He will continue to lead the Search and Holistic Monetization organizations focusing on consumer service monetization including search advertising. While Rik has spent the last several years in the product group, he has been a close partner to SMSG as the Advertising business group owner. Please join me in welcoming Rik and his team to SMSG.

We expect that both of these changes will result in difficult headcount reductions in the direct and supporting organizations. There may also be other reductions around the world as we further align our business for success in FY16. These transitions are difficult, and to employees who may be impacted by these plans, I would like to extend my sincere appreciation and thank you for your service and dedication to Microsoft.

As a team, we have a lot of work ahead of us in FY16 and beyond, but I am confident that working together we will make Microsoft a leader in the mobile-first, cloud-first world.

Thank you for all of your hard work and support.


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