Microsoft said Thursday that it would slash 14 percent of its workforce this year as it trims its newly acquired Nokia phone business and tries to reshape itself into a cloud-computing and mobile-friendly software company.
The job cuts are the deepest in the company’s 39-year history and come five months into the tenure of Chief Executive Officer Satya Nadella, who outlined plans for a "leaner" business in a public memo to employees last week.
Of up to 18,000 layoffs, about 12,500 will come from eliminating overlaps with the company’s Nokia unit. Microsoft acquired the mobile phone giant in April for $7.2 billion, resulting in the addition of 25,000 people to Microsoft's payroll, pushing its overall head count up to 127,000.
The Nokia-related cuts were expected. Microsoft said from the outset that the deal would cut $600 million per year in costs within 18 months of closing the acquisition.
Microsoft did not say 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 cuts are the biggest at the Redmond, Washington–based company since Nadella’s predecessor Steve Ballmer axed 5,800, or about 6 percent of head count, at the height of the recession in early 2009.
Nadella told employees on Thursday that the company would lay off the initial 13,000 employees over the next six months.
Microsoft announced in April of this year that for the third quarter of its 2014 fiscal year, its net income was $5.66 billion, down roughly $400 million from the same period in 2013. Its fourth quarter earnings results will be posted on July 22.
Microsoft shares jumped 3 percent to $45.40 in early trading on Thursday, reaching their highest since the technology stock boom of 2000.
Nadella's moves are designed to help Microsoft shift from being a primarily software-focused company to one that sells online services, apps and devices it hopes will compete with Google and Apple, which have dominated the new era of mobile-centric computing.
Marking this change of emphasis, Nadella last week rebranded Microsoft "the productivity and platform company for the mobile-first and cloud-first world."
Microsoft is not alone among the pioneers of the personal computer revolution now slimming down to adapt to the Web-focused world.
PC maker Hewlett-Packard is in the midst of a radical three- to five-year plan that will lop up to 50,000 from its staff of 250,000.
IBM is also undergoing a "workforce rebalancing," which analysts say could mean 13,000 — about 3 percent — of its staff being laid off or transferred to new owners as units are sold. Chipmaker Intel and network equipment maker Cisco Systems both said in the past year that they were cutting about 5 percent of their staffs.
Al Jazeera and wire services