Microsoft to cut 18,000 jobs as part of reorganisation following Nokia acquisition

Thursday 17 July 2014 19.57
Microsoft employs more than 1,200 people in Ireland, with hundreds more working as contract staff
Microsoft employs more than 1,200 people in Ireland, with hundreds more working as contract staff

Microsoft is to cut up to 18,000 jobs, or 14% of its workforce, this year as it trims its newly acquired Nokia business and reshapes itself as a cloud and mobile-friendly company.

The deepest job cuts in the company's 39-year history come five months into the tenure of CEO Satya Nadella, who outlined plans for a "leaner" business in a public memo to employees last week.

The company, which employs around 1,200 people in Ireland as well as hundreds of contract staff, has not yet given a country-by-country break down of the cuts.

However it is understood that only a handful of jobs at its Irish operations are likely to be affected.

About 12,500 of the layoffs will come from eliminating overlaps with the Nokia unit, which Microsoft acquired in April for $7.2 billion. 

Microsoft did not say how many jobs would come from Nokia and how many from existing operations. 

The acquisition of Nokia's handset business in April added 25,000 people to Microsoft, pushing its overall headcount up to 127,000.

The Nokia-related cuts were widely expected. Microsoft said when it struck the deal that it would cut $600m per year in costs within 18 months of closing the acquisition.

The company said it expects to take pre-tax charges of $1.1bn to $1.6bn over the next four quarters to account for the costs of the layoffs.

Mr Nadella's cuts are the biggest at the Redmond, Washington-based company since predecessor Steve Ballmer axed 5,800, or about 6% of headcount, in the depths of the recession in early 2009.

The new CEO's moves are designed to help Microsoft shift from being a primarily software-focused company to one that sells online services, apps and devices it hopes will make people and businesses more productive. 

Mr Nadella needs to make Microsoft a stronger competitor to Google and Apple, which have dominated the new era of mobile-centric computing.

Marking this change of emphasis, Mr Nadella last week rebranded Microsoft as "the productivity and platform company for the mobile-first and cloud-first world."

Microsoft is not alone among the pioneers of the personal computer revolution now slimming down to adapt to the web-focused world.

PC-maker Hewlett-Packard is in the midst of a radical three-to-five-year plan that will lop up to 50,000 from its staff of 250,000.

IBM is undergoing a "workforce rebalancing," which analysts say could mean 13,000, or about 3% of its staff, being laid off or transferred to new owners as units are sold.

Chipmaker Intel and network equipment maker Cisco Systems both said in the past year they were cutting about 5% of their staffs.

Keywords: microsoft