Microsoft shares opened +3.2% this morning after the company disclosed that it will cut its workforce by about 14% –far more than many analysts anticipated. The layoffs will hit hardest at the Nokia Devices and Services phone handset business, acquired in April. “We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months,” CEO Satya Nadella says in a company wide email. Microsoft expects the restructuring to result in as much as $1.6B in pre-tax charges over the next four quarters. That will include as much as $800M for severance and related benefit costs, and up to $800M in asset-related charges.
The company’s biggest layoff since 2009 reflects Nadella’s plan to shift Microsoft’s focus away from its longtime strength in PC software toward other areas that show more promise. “Our passion is to enable people to thrive in this mobile-first and cloud-first world,” he told employees last week.
The CEO said today that Microsoft will offer severance and job transition help to those axed. Everyone “can expect to be treated with the respect they deserve for their contributions to this company.”