Microsoft Corporation (NASDAQ:MSFT) just announced plans to cut 18,000 jobs over the next year via an official statement on Thursday. This is part of the chief executive officer Satya Nadella’s plan to streamline the company.
Microsoft’s job cuts details
Microsoft reported that 12,500 of the professional and factory jobs will be cut thanks to the company’s acquisition of Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s handset business. The personal computer maker acquired Nokia back in April. Nadella told his employees in a memo that he plans to make the process thoughtful and transparent. He also said that most employees who will be let go will be notified in the next six months. These employees will receive severance packages and job transitions. All the cuts are expected to be completed by next June.
FBR Capital Markets analyst Daniel Ives believes the cuts, which is larger than expected, may indicate Nadella wants to simplify Microsoft’s structure. Under Ballmer’s reign as CEO, Microsoft had many layers of management and a wide range of expensive initiatives that hurt the company’s finances and strategy. This likely affected the company the most during the Nokia acquistion. Nadella is hoping to transition the company for the next chapter of growth in the mobile and cloud sectors.
Pre-tax charges
Microsoft Corporation (NASDAQ:MSFT) expects over the next year, it will receive pre-tax charges as high as $1.6 billion. This will include $750 million to $800 million in severence and benefits. The company also expects to incur $350 million to $800 million in charges related to assets.
Just last week, Nadella sent a memo to his employees discussing plans to reinforce mobile-first, cloud-first business while unifying software and hardware. His note explained Microsoft has the ability to combine devices, apps, data, docs, and social media in digital experiences. This enables people to be at the center with the empowerment to do more and acheive more in a timely manner.
Today, we shared the official press release that outlines the Microsoft’s plans for the future which are all in part of simplifying the company’s overall structure. Microsoft has been struggling for years to compete in a market dominated by rivals like Apple Inc. (NASDAQ:AAPL) and Samsung Electronics Co. Ltd. (LON:BC94) (KRX:0059935). At press time, there is no official date when the layoffs will start.
