18,000 jobs. That’s the number out of Microsoft this morning. Estimates earlier in the week were calling for around 6,000. The largest estimates put the number at 12,000. Today’s number dwarfs both and takes out 14% of Microsoft’s workforce.
About 12,500 of these jobs are coming from professional and factory positions at Nokia’s handset business Microsoft acquired. The other 5,500 are Microsoft employees.
Today’s job cut announcement dwarfs 2009’s cut of more than 5,000 and is the largest in the history of Microsoft.
CEO Satya Nadella announced the job cuts in a letter to employees. In it, he said Microsoft’s “work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.”
Basically, Microsoft has no need for factory positions as Nadella positions Microsoft towards a services first company. Plus, redundancies from the Nokia acquisition mean more jobs cuts.
Nadella wants to shift Microsoft from a software-focused company to one that sells services, devices and apps that make businesses and people more productive. They have an uphill fight as they go against tech giants Google, Apple and others.
This shift in focus was emphasized by Nadella last week when he called Microsoft “the productivity and platform company for the mobile-first and cloud-first world.”
On the job cuts Nadella said,“My promise to you is that we will go through this process in the most thoughtful and transparent way possible,” said Nadella in a letter to employees.
Nadella talked about how the cuts will “simplify the way we work to drive greater accountability, become more agile and move faster,” in the letter.
“We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making.”
As usual, Wall Street is cheering today’s move. Fewer employees mean less costs. Investors are pushing Microsoft shares up more than 2% in the first hour of trading. The biggest jobs cut in Microsoft’s history is propelling its stock to highs not seen since the 2000 tech boom.