Microsoft 'almost' wraps up largest layoff sweep in its history

The company just went through another round of job cuts

Microsoft has handed out pink slips in a third round of job cuts that "almost" concludes its plan to eliminate 18,000 positions.

The company announced in July that it would let go about 14 percent of its workforce, the largest set of job cuts in its history, but instead of axing them with one swing, Microsoft said it would carry out the job cuts over the course of its fiscal year, which ends in June of next year.

Some critics termed this approach unwise, saying it would prolong uncertainty among employees, drag down staff morale, reignite concern among enterprise customers, give talking points to rivals and generate bad press for the company multiple times.

It's not clear whether Microsoft took any of that advice into account, but clearly at some point recently it decided to get the layoffs over with sooner rather than later.

"Microsoft has taken another step that will complete almost all the 18,000 reductions announced in July. The reductions happening today are spread across many different business units, and many different countries," a Microsoft spokeswoman said via email Wednesday, without specifying how many more jobs are left to cut, nor when those will be eliminated.

In the first wave of layoffs, Microsoft dismissed about 13,000 employees, and cut another 2,100 or so in September, so this latest round likely involved some 2,900.

About 12,500 of the jobs were eliminated as part of the absorption of the Nokia Devices and Service business for which Microsoft paid more than US$7 billion in a deal that closed in April.

In its first fiscal quarter, ended Sept. 30, Microsoft grew its revenue 25 percent, but its profits dropped, dragged down by $1.14 billion in integration and restructuring charges related to the layoffs and to the Nokia business integration, which lopped off $0.11 per share in earnings. Microsoft still managed to beat Wall Street's earnings per share expectations by $0.05.

The Nokia acquisition was brokered by Steve Ballmer, the predecessor of current CEO Satya Nadella, who took over in February. In public statements Nadella has tempered Ballmer's enthusiasm about turning Microsoft into an Apple-like maker of tightly integrated devices and software.

"Our approach to first-party hardware going forward is clear: At times we'll develop new categories like we did with Surface. And we will responsibly make the market for Windows Phone," Nadella said in July. "However, we're not in hardware for hardware's sake, and the first-party device portfolio will be aligned to our strategic direction as a productivity and platform company."

For example, during Nadella's watch, the development of a long-rumored smaller Surface tablet, reportedly called Mini, was canceled.

Juan Carlos Perez covers enterprise communication/collaboration suites, operating systems, browsers and general technology breaking news for The IDG News Service. Follow Juan on Twitter at @JuanCPerezIDG.

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Tags Microsoftbusiness issuessoftwarelayoffs

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Juan Carlos Perez

IDG News Service
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