Microsoft cutting 18,000 jobs worldwide to ease Nokia burden

Microsoft Corp on Thursday announced plans to eliminate a larger-than-expected 18,000 jobs worldwide, or 14 per cent of its workforce, the deepest job-cut in 39 years of the company's existence.

About 12,500 of the layoffs will come from eliminating overlaps with the Nokia unit, which Microsoft acquired in April for $7.2 billion. Microsoft did not specify the number of jobs to be eliminated at Nokia or at its existing operations.

For Microsoft, which acquired Nokia's phone business in April, the job-cuts are part of the efforts to transform itself into a cloud-computing and mobile-friendly software company (See: Satya Nadella's letter to all employees: Bold Ambition & Our Core).

The acquisition had added 25,000 employees to Microsoft's payroll.

Chief executive Satya Nadella took charge about five months back, had outlined plans for a "leaner" business in a public memo to employees last week.

"We will simplify the way we work to drive greater accountability, become more agile and move faster," Nadella wrote to employees in a memo made public early Thursday. "We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making."

In his acceptance speech while taking over reins of the company from Steve Ballmer, Nadella had stated that the ''industry does not respect tradition – it only respects innovation.'' He had also promised to accelerate innovation at Microsoft, which he said was to rediscover the soul – our unique core of the company.

''We must all understand and embrace what only Microsoft can contribute to the world and how we can once again change the world,'' he had said, adding that he considered the job to be bolder and more ambitious than anything it had done before.

The Nokia-related cuts were widely expected since Microsoft had announced plans to cut $600 million per year in costs within 18 months of closing the acquisition.

Microsoft did not detail exactly where the remaining jobs would be cut, but said the first wave of layoffs would affect 1,351 jobs in the Seattle area.

The company said it expects to take pre-tax charges of $1.1 billion to $1.6 billion over the next four quarters to account for the costs of the layoffs.

Nadella's cuts are the biggest at the Redmond, Washington-based company since Ballmer axed 5,800, or about 6 per cent of workforce, in early 2009.

The new CEO's moves are designed to help Microsoft shift emerge as a provider of online services, apps and devices, which it hopes will be more productive.

Nadella's mission is to make Microsoft a stronger competitor to Google Inc and Apple Inc, which have dominated the new era of mobile-centric computing.