Microsoft (MSFT) announced its biggest layoffs in the company’s 39-year history as it looks to tranform itself into a leaner and meaner player in the cloud and mobile space.
The software giant said it will slash up to 18,000 jobs, or about 14% of its workforce over the next year. It's the company’s largest layoffs since 2009, when it cut more than 5,000 jobs, and it's a lot more than the approximate 6,000 that were expected. The move is part of Microsoft's mission to streamline its business under new CEO Satya Nadella, who replaced Steve Ballmer in February.
A majority of the job cuts, 12,500 professional and factory positions, will be eliminated as part of its $7 billion acquisition of Nokia’s handset business. The deal boosted Microsoft headcount by a quarter to 127,000 according to Reuters. Microsoft employees affected by the job cuts are expected to be notified in the next six months.
"My promise to you is that we will go through this process in the most thoughtful and transparent way possible,” Nadella said in a memo to employees.
Microsoft shares rose on the news. The stock reaction shows that the general perception of Microsoft is that’s is a bloated bureaucracy, and one that really needs a higher competitive spirit, said Yahoo Finance Senior Columnist Michael Santoli.
This comes after a 3,100-word memo to employees last week, where Nadella outlined his vision for Microsoft as "the productivity and platform company for the mobile-first and cloud-first world."
Microsoft said it expects to take a pre-tax charge of $1.1 billion to $1.6 billion over the next four quarters, some of which will include severance and benefit related costs.