Source: Microsoft
Microsoft will cut 2,850 jobs globally, according to a July 28 filing with the SEC. The positions to be eliminated will come primarily from Microsoft’s smartphone hardware business and global sales. These cuts are in addition to the elimination of 1,850 jobs announced by Microsoft in May 2016. The first batch of layoffs would result in an impairment and restructuring charge of approximately $950 million, about $200 million of which would be severance payments.
“We are focusing our phone efforts where we have differentiation – with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” said CEO Satya Nadella in May’s announcement. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”
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Of the initial 1,850 jobs to be eliminated, up to 1,350 of those jobs would be cut from Microsoft Mobile Oy in Finland and another 500 jobs globally. Finland is home to Nokia, which Microsoft purchased in 2014. At the time of the purchase, Microsoft cut 18,000 positions, its biggest round of layoffs ever. Last summer, Microsoft announced layoffs of 7,800 people, also in the smartphone hardware business, said CNN Money.
The round of layoffs announced in May should be mostly complete by the end of 2016 and fully complete by July 2017. It is not yet known where the newest round of 2,850 jobs would come from or when the cuts would begin.
As of June 30, Microsoft had approximately 114,000 fulltime employees, including 63,000 in the U.S. and 51,000 internationally. The two rounds of layoffs represent about 4.1 percent of Microsoft’s total workforce.
“[We’re] scaling back, but we’re not out,” said Terry Myerson, executive vice president of Microsoft’s Windows and Devices Group, in an email to employees in May, according to the Wall Street Journal.
Insider Take:
On July 21, we reported Microsoft’s fiscal year end results, and the company is experiencing growth in subscription-based products (e.g., Office 365, Xbox Live, Azure) and in the cloud services arena, but has seen revenue declines for both devices and gaming.
Microsoft is re-evaluating its costs and rethinking its smartphone hardware and software strategy to better allocate its resources. It is a harsh reality for the 4,700 employees about to lose their jobs, but probably necessary for Microsoft to shift its focus away from smartphones.
