Microsoft To Layoff 18,000, Mostly from Nokia

It's just never a positive development for the human capital involved when the guy who engineered a controversial and strategically disappointing merger is then himself  encouraged to pursue alternative career options.

One of the last desperate acts of Steve Ballmer's Microsoft leadership was his acquisition of once dominant Finnish phone maker Nokia.

Both companies were widely considered to be past their days of glory and the perception was that 0 plus 0 was unlikely to equal 2. Ballmer's departure and successor Satya Nadella's arrival only confirmed those beliefs, especially when former Nokia CEO Stephen Elop, who actively campaigned for the top  Microsoft position, was passed over for it.

So Nadella's announcement is effectively beginning the process of unwinding of a predecessor's mistakes. One can not help but wondering, however, whether MSFT is missing yet another opportunity. Given the supposed dearth of global tech talent, someone with vision is going to find a lot of skilled - and grateful - employees. JL

Sebastian Anthony reports in ExtremeTech:

The bulk of the layoffs — 12,500 — will be former Nokia employees who are no longer needed: a full half of the 25,000 Nokia employees that were part of the acquisition.
Microsoft has announced that it will fire around 18,000 employees over the next year, or almost 15% of its global workforce of 127,000. The bulk of the layoffs — 12,500 — will be former Nokia employees who are no longer needed after the acquisition. 13,000 employees will be fired immediately, or at least notified of their imminent removal in the next six months. The mass job-cut is occurring for two key reasons: There is a lot of “synergy and strategic alignment” (Nadella’s words) to be made following Microsoft’s acquisition of Nokia — and, of course, tons of space must be made so that Nadella can successfully reorient the company towards his Mobile and Cloud dream vision.
To put those 18,000 layoffs into perspective, the only other big layoff in Microsoft’s history was in 2009, when Ballmer fired 5,900 employees during the financial recession. But get this: 12,500 is a full half of the 25,000 Nokia employees that were part of the acquisition. Nadella’s statement says that the 12,500 Nokia job cuts will consist of both factory workers (Nokia makes its own phones) and professionals. Considering Nokia was one of the largest employers in Finland, I can imagine there’ll be a lot of sad conversations around the dinner table tonight.

Many of today’s job cuts will occur overseas, at Nokia HQ in Finland

While many of the Nokia job cuts will be due to efficiency and moving everyone under one corporate roof (i.e. lots of Nokia marketing and PR people will have been fired in favor of existing Microsoft employees), I wouldn’t be surprised if there’s also an element of buyer’s remorse. The Nokia acquisition was orchestrated by Ballmer, back when Microsoft wanted to be a devices company. Now, under Nadella’s rule, Microsoft will pivot yet again to platforms and productivity (cloud, operating systems, apps). With the Nokia acquisition, Microsoft instantly became one of the world’s largest hardware companies — a position that Nadella probably no longer wants to be in.
Nadella’s memo doesn’t say much about remaining 5,500 job cuts from within Microsoft. Like his rather flowery and bombastic essay last week, the layoff memo is mostly just fluff about Microsoft needing to be more agile. Hopefully we’ll find out more specifics — which jobs are being cut, what structural changes are being made, which new positions are being created — at Microsoft’s earnings call on July 22. It will take more than just job cuts to give Windows and Windows Phone a fighting chance in today’s computing environment.

The Android-powered Nokia X is going away

Curiously, while most of the job-cut memo is incredibly vague, Nadella is surprisingly specific about one thing: The Android-powered Nokia X smartphones will become Windows-powered Lumia devices. Yes, if you thought that Microsoft couldn’t really in its right mind sell Android phones, you were right. With Nadella halving the number of employees in the Nokia division, I suspect the Lumia brand had some tough times ahead of it as well.
Finally, as a “fun” aside, while 18,000 job cuts is a large layoff, it’s by no means the largest. Back in 2009, following the massive global recession, Citigroup and General Motors both laid off around 50,000 people. The biggest cuts of all time were probably at IBM, which went from around 400,000 employees in 1985 to around 225,000 in 1993, including a massive round of 60,000 cuts in 1993. Microsoft says it will pay severance to everyone laid off during the cuts, incidentally — which will probably cost the company billions of dollars.