- 18,000 jobs will be cut in the coming year — about 14 percent of the workforce — including
- 12,500 jobs cut at Nokia, both professionals and factory workers, which means
- about 5,500 layoffs of non-Nokia employees (slightly less than Microsoft's previous huge round of layoffs in 2009, which cut 5,800 employees)
- 13,000 layoffs to come in the first wave
- 1,351 of those first-wave layoffs in the Seattle area
Stephen Elop, former Nokia CEO and current head of Microsoft Devices, goes into more detail about phone product shifts, specifically eviscerating Android from the Microsoft mobile heartland (although Android is not mentioned anywhere, in either announcement, by name).
We will be particularly focused on making the market for Windows Phone. In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest-growing segments of the market, with Lumia. In addition to the portfolio already planned, we plan to deliver additional lower-cost Lumia devices by shifting select future Nokia X [Android] designs and products to Windows Phone devices. We expect to make this shift immediately while continuing to sell and support existing Nokia X products.
Say good-bye to the Android Nokia X2, announced less than a month ago.
Financially, Microsoft reports:
The company expects to incur pre-tax charges of $1.1 billion to $1.6 billion over the next four quarters, including $750 million to $800 million for severance and related benefit costs, and $350 million to $800 million of asset-related charges.
Todd Bishop at Geekwire quotes unidentified insiders as saying:
Microsoft's Operating Systems division, including Windows, will be slightly harder hit by the first wave of cuts than the company's Cloud & Enterprise and Online Services divisions, which have already taken some steps to align with Nadella's vision for streamlined engineering.
The stock market roared approval, with Microsoft up more than 3 percent in early trading.
As you read about the layoffs, keep a bit of perspective by remembering that former CEO Steve Ballmer was the driving force behind the acquisition of Nokia. As Ballmer knew too well, it's hard to build a "devices and services" organization when your only significant devices are largely ignored tablets, keyboards, and mice. Good keyboards and mice, it's true, but still ...
Dina Bass described the climate surrounding the acquisition in BloombergBusinessweek a few months ago:
Ballmer's relations with the [Microsoft] board hit a low when he shouted at a June meeting that if he didn't get his way he couldn't be CEO, people briefed on the meeting said. The flare-up was over his proposed purchase of most of Nokia, and part of an ongoing debate: Should Microsoft be a software company or a hardware company too? Several directors and cofounder and then-Chairman Bill Gates — Ballmer's longtime friend and advocate — initially balked at the move into making smartphones, according to people familiar with the situation. So, at first, did Nadella, signaling his position in a straw poll to gauge executives' reaction to the deal. Nadella later changed his mind.
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