USA: Cutting 18,000 jobs this year will sharpen Microsoft's focus and play well with shareholders, according to analyst Lance Ulanoff of Mashable.com

Record ID: 452093

  • Title: USA: Cutting 18,000 jobs this year will sharpen Microsoft's focus and play well with shareholders, according to analyst Lance Ulanoff of Mashable.com
  • Date: 17th July 2014
  • Summary: NEW YORK, NEW YORK, UNITED STATES (JULY 17, 2014) (REUTERS) LANCE ULANOFF, EDITOR AT LARGE OF MASHABLE.COM WALKING (SOUNDBITE) (English) LANCE ULANOFF, EDITOR AT LARGE OF MASHABLE.COM SAYING: "So here comes the pain. I mean this is real, 18,000 is a lot of people mostly on the Nokia side. Obviously some duplication of jobs but also some real shifts. Nothing is off the table. I was thinking how this is what Ballmer couldn't do. Steve Ballmer, the former CEO who was there from the start, maybe he never felt comfortable making these kind of Draconian changes to make this truly Microsoft a 21st century company."
  • Embargoed: 1st August 2014 13:00
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  • Location: Usa, Finland
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  • Country: Usa Finland
  • Topics: General
  • Reuters ID: LVAAUG54FFIWT5MGTHWOQFTXAENM
  • Story Text: Microsoft Chief Executive Officer Satya Nadella kicked off one of the largest layoffs in tech history on Thursday (July 17), signaling he intended to shake up the aging PC industry titan, but leaving questions about how exactly he would transform it into a nimbler, Web-based rival to Apple Inc and Google Inc.
    Microsoft Corp said it will slash up to 18,000 jobs, or 14 percent of its workforce, over the next 12 months as it almost halves the size of its newly acquired Nokia phone business and tries to become a cloud-computing and mobile-friendly software company.
    The larger-than-expected cuts are the deepest in the software giant's 39-year history and come five months into Nadella's tenure.

    "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."
    Lance Ulanoff, Editor at large of Mashable.com, said the move will certainly be tough, but necessary for the company to transform itself.

    "Here comes the pain. I mean this is real - 18,000 is a lot of people mostly on the Nokia side. Obviously some duplication of jobs but also some real shifts. Nothing is off the table. I was thinking how this is what Ballmer couldn't do. Steve Ballmer, the former CEO who was there from the start, maybe he never felt comfortable making these kind of Draconian changes to make this truly Microsoft a 21st century company," Ulanoff said.
    Beyond the Nokia reductions, Nadella gave few clues about where the ax will fall or what areas will receive more funding, saying he will answer questions from employees at a town hall meeting at Microsoft headquarters in Redmond, Washington, on Friday and flesh out his plans publicly after Microsoft's quarterly earnings report on July 22.
    The size of the cuts were welcomed by Wall Street, which was critical of the Nokia acquisition and viewed Microsoft as bloated under previous CEO Steve Ballmer, topping 127,000 in staff after absorbing Nokia earlier this year.
    Ulanoff says the move comes at a good time as earnings have not yet been released and he is sure that shareholders will be pleased with the move.

    "They wanted Steve Ballmer out, it was time. And they wanted whoever was in to not only understand the company and the strategy but be willing to make the tough decisions. Satya has proved that he can and I think they are going to be thrilled by that. In fact, I'm certain they are happy. They're sad for the cuts because it hurts real people but they know that this is a clear vision, aggressive move that will make them leaner and more aggressive and he's not done," Ulanoff said.

    "We should not think that this is the end of it. I don't know if there will be more cuts coming but there will be more moves, changes, rising stars," he added.
    Microsoft shares jumped 1.8 percent to $44.88 on Nasdaq, reaching their highest since the technology stock boom of 2000.
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