What could be the deepest job cuts in the
company's 39-year history come five months into the tenure of
Chief Executive Officer Satya Nadella, who outlined plans for a
"leaner" business in a public memo to employees last week.
Many of the cuts are expected to come from the Nokia unit, which
Microsoft acquired in April for $7.2 billion, pushing up
Microsoft's headcount by a quarter to 127,000. Microsoft said
when it struck the deal to buy the Finnish phone maker that it
would cut $600 million per year in costs within 18 months of
closing the acquisition.
Microsoft is also expected to trim staffing at its Xbox game and
entertainment unit, which Nadella last week praised but stopped
short of describing as a "core" business.
Nadella's cuts are set to be the biggest at the Redmond,
Washington-based company since his predecessor Steve Ballmer
axed 5,800, or about 6 percent of headcount at that time, in the
depths of recession in early 2009.
The new CEO's move is designed to help Microsoft shift from
being a primarily software-focused company to one that sells
online services, apps and devices that it hopes will make people
and businesses more productive. Nadella needs to make Microsoft
a stronger competitor to Google Inc and Apple Inc, which have
dominated the new era of mobile-centric computing.
Marking this change of emphasis, 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 that are now slimming down as they adapt to
the Web-focused world.
PC-maker Hewlett-Packard Co is in the midst of a radical
three-to-five-year plan that will lop up to 50,000 of its
International Business Machines is undergoing a "workforce
rebalancing," which analysts say could mean 13,000, or about 3
percent of its staff, being laid off or transferred to new
owners as units are sold.
Chip maker Intel Corp and network equipment maker Cisco Systems
Inc both said in the past year they are cutting around 5 percent
of their staff.
(Reporting by Ron Grover in Los Angeles and Bill Rigby in
Seattle; Editing by Mohammad Zargham)
[© 2014 Thomson Reuters. All rights
Copyright 2014 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.