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Microsoft to cut up to 18,000 jobs

on July 17, 2014 11:42 AM

SEATTLE — Microsoft said Thursday that it planned to eliminate up to 18,000 jobs over the next year in a shake-up intended to help the company move more quickly in the market.

The cuts are the largest in the company’s 39-year history, representing about 14 percent of its workforce.

Microsoft will make the deepest cuts from the businesses it acquired from the Finnish phone maker Nokia. About 12,500 of the jobs being eliminated will come from the Nokia groups, resulting from the closing of a factory in Hungary and other changes.

That is about half the number of employees who joined Microsoft from Nokia a few months ago when Microsoft completed its acquisition of Nokia’s mobile business.

Microsoft said it would take a charge of $1.1 billion to $1.6 billion to cover severance and related costs from the layoffs over the next year.

On Thursday, Satya Nadella, the company’s chief executive, said in an email to employees announcing the job cuts that the layoffs are an effort to become more agile, a message he has given repeatedly since he took the job in February.

“Having a clear focus is the start of the journey, not the end,” he said in the email. “The more difficult steps are creating the organization and culture to bring our ambitions to life.”

He added: “The first step to building the right organization for our ambitions is to realign our work force.”

The huge job cuts in the businesses it acquired from Nokia raise questions about Microsoft’s plans in the market for mobile devices. The acquisition, initiated by Steven A. Ballmer, Microsoft’s previous chief executive, greatly increased the company’s presence in the hardware business, which is outside its traditional expertise. The deal has been an unpopular one with investors and many people insideMicrosoft.

Microsoft was often criticized for being unfocused during Ballmer’s tenure, and for having a swelling product line and layers of bureaucracy.

“Under the Ballmer era there were many layers of management and a plethora of expensive initiatives being funded that has thus hurt the strategic and financial position the company is in, especially in light of digesting the Nokia acquisition,” said Daniel Ives, an analyst at FBR Capital Markets, who called the cuts necessary.

 

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