Microsoft CEO Satya Nadella is cutting 18,000 jobs from Microsoft just five days before Microsoft is scheduled to report second quarter earnings.
We knew Nadella had plans to “restructure” the corporation, but Thursday he confirmed that “restructuring” means massive layoffs. In fact, this is the biggest round of job cuts in Microsoft history.
In an email sent this morning to Microsoft employees, Nadella explained, “It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible.”
Nadella’s announcement encouraged investors this morning: Microsoft’s stock jumped three percent before the market open.
The downsizing is a direct result of Microsoft’s 2013 purchase of Nokia Devices and Services and a desire to streamline the business and “become more agile and move faster.” Of the 18,000 jobs to be cut, 12,500 will be Nokia employees.
“Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment,” Nadella said.
Microsoft executive vice president Stephen Elop also sent an email to employees this morning, reiterating Nadella’s statements but also elaborating on what Microsoft plans to do with Nokia.
“We will be particularly focused on making the market for Windows Phone,” Elop said. “With our focus, we plan to consolidate the former Smart Devices and Mobile Phones business units into one phone business unit that is responsible for all of our phone efforts.”
Elop also explained there would be “severance benefits” for employees cut from Nokia.
“We plan that this would result in an estimated reduction of 12,500 factory direct and professional employees over the next year,” Elop said. “These decisions are difficult for the team, and we plan to support departing team members’ with severance benefits.”
According to Microsoft’s press release, Microsoft will be spending $1.1 billion to $1.6 billion on severance and related benefits costs and asset related charges during the next four quarters.
When asked what Microsoft’s severance benefits for laid off employees would look like, Microsoft declined to comment to The Daily Caller.