Light Reading

Microsoft to Axe 12,500 Ex-Nokia Employees

Sarah Thomas
7/17/2014
50%
50%

The day many ex-Nokia employees have been dreading is here. In what will be its biggest round of layoffs ever, Microsoft plans to eliminate 18,000 positions over the next year, including 12,500 associated with its Nokia acquisition.

The Redmond, Wash.-based company said on Thursday that it would incur a restructuring charge of $1.1 billion to $1.6 billion as part of its plan to "simplify its organization and align the recently acquired Nokia Devices and Services business with the company's overall strategy." The costs include $750 million to $800 million in severance and related benefit costs and $350 million to $800 million in asset-related charges. (See Eurobites: Ex-Nokia Staff Fear Microsoft Axe.)

It's starting with 13,000 cuts now with the rest coming this year. Out of the 18,000 slated to get the axe, 12,500 will be professional and factory positions made redundant after the Nokia acquisition in April. That represents nearly half of the approximately 30,000 Nokia employees that came over in the deal. (See Microsoft Officially Closes Nokia Buy and Nokia: It's Really Happening.)

Microsoft Corp. (Nasdaq: MSFT)'s notorious EVP Stephen Elop and new CEO Satya Nadella broke the news to employees in separate memos explaining the layoffs as a necessary step in the company's strategy to become a productivity and platform company. Nadella noted that Microsoft would also be adding some positions and doing away with several layers of management to be more agile. (See Nadella Promotion Ends Microsoft CEO Search and Microsoft's Elop Denies He Was a Trojan Horse .)

The new mobile phone business unit will be led by Jo Harlow and phone engineering will take place in Salo, Finland for future, high-end Lumia products and Tampere, Finland for more affordable devices. Nokia's former headquarters in Espoo, Finland, will be used for app software development. (See Nadella's full memo here and Elop's here.)

Nadella also said the company would work to win with higher price tiers by focusing on innovation around Microsoft's digital work and digital life experiences, as well as shift select Nokia X product designs to become Lumia products running Windows for the affordable smartphone space.

"The roots of this company and our future are in productivity and helping people get things done," Elop added in his memo. "Our fundamental focus -- for phones, Surface, for meetings with devices like PPI, Xbox hardware and new areas of innovation -- is to build on that strength."

Microsoft faces a significant challenge in "making the market for Windows Phone," as Elop said. Its operating system has been a distant third to Android and iOS and, likewise, Nokia struggled to keep up with Apple Inc. (Nasdaq: AAPL) and Samsung Corp. in device hardware, finding the most success in the low-end market. Today's announcement signifies Microsoft's move to Windows Phone only. According to Jackdaw Research analyst Jan Dawson, that means a much smaller Nokia than in the past. It's going to be an uphill battle, he says, but not a lost cause.

"The challenge is that the feature phone business was more profitable than the smartphone business, and so overall profits will decline. At the same time, devices have a different role at Microsoft than they did at Nokia," Dawson writes in an email to Light Reading. "At Nokia, shipments themselves were the focus, but at Microsoft it's all about promoting Microsoft services, so even if it has a small market share and doesn't make much money, it can still be successful."

Microsoft shares were up 1.18%, or .52 points, to $44.60, on Thursday after news of the restructuring.

— Sarah Reedy, Senior Editor, Light Reading

(23)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Page 1 / 2   >   >>
Susan Fourtané
50%
50%
Susan Fourtané,
User Rank: Blogger
7/19/2014 | 12:13:52 AM
Re: Bye Bye Android
Kruz, 

True. Lots of people only wanted Android on a Nokia phone. The new Microsoft Lumia is not going to work, or any other of the phones. 

-Susan 
Susan Fourtané
50%
50%
Susan Fourtané,
User Rank: Blogger
7/18/2014 | 11:57:39 PM
Re: How it was done
Mitch, 

There are not enough stars, or thumbs to show how much I liked your comment on Elop's memo. 

And, fedoras are great. I like fedoras, too. More men should wear them and more often. I only know a few who wear fedoras. Such a classy accessory. :) Great on Indie and Humphrey as well. Do you wear fedoras? 

-Susan
smkinoshita
50%
50%
smkinoshita,
User Rank: Light Sabre
7/18/2014 | 4:30:50 PM
Re: How it was done
@FakeMitchWagner:  The fedora looks good on some people, but the bad part has to do with people who should not wear fedoras wearing fedoras and acting in a way that gives the hat a bad name.

In other news, I don't see Microsoft changing anytime soon.  It's a very engrained culture.
Mitch Wagner
50%
50%
Mitch Wagner,
User Rank: Lightning
7/18/2014 | 4:13:30 PM
Re: Not just employees
Scott - You don't see new leadership reducing the insistence on the Microsoft Way?
Gabriel Brown
100%
0%
Gabriel Brown,
User Rank: Light Sabre
7/18/2014 | 11:29:20 AM
Re: How it was done
You'd think there would be a place for Elop out of 18,000 eliminated positions.
Mitch Wagner
100%
0%
Mitch Wagner,
User Rank: Lightning
7/18/2014 | 10:50:20 AM
How it was done
The memo from Steve Elop was long-winded and clumsy.

Having been laid off a couple of times myself, I can tell you my LEAST FAVORITE way of being laid off is being made to sit through a long speech about the company strategy and vision.

During which time I'm thinking, "Oh, yes, this is the strategy and vision for the company ABOUT WHICH I NO LONGER CARE BECAUSE I DON'T WORK FOR THEM ANYMORE?!"

 The best way to handle a layoff: "Sorry, you're laid off. Here's your paycheck. There's the door." The (former) employee no longer cares what you have to say and the thing he wants most in the world is to see you getting smaller in the rearview mirror. 

Also: Fedoras are bad now? I like fedoras. Indiana Jones wore a fedora. Humphrey Bogart wore a fedora. 
kq4ym
50%
50%
kq4ym,
User Rank: Light Sabre
7/18/2014 | 9:33:15 AM
Re: Who saw this coming?
I think the word "challenging" is quite right. It's beyond some common sense to understand how Microsoft will hanle this new challenge. Maybe they have some unsaid business plan lurking behind the rhetoric?
R Clark
50%
50%
R Clark,
User Rank: Blogger
7/18/2014 | 3:04:07 AM
Who saw this coming?
If you put two under-performing businesses together you will get one big under-performing business.

 
Kruz
50%
50%
Kruz,
User Rank: Light Sabre
7/18/2014 | 2:19:05 AM
Re: Bye Bye Android
It seems inevitable to do the job cut but the timing couldn't be worse.

How can a customer potentially ever trust Windows/Nokia when buying a phone?

From the Symbian change, to Mameo, to now killing the X series (while X2 was just announced) and dashing the performing low end Ashas, Windows is just saying to the customers: I cannot guarantee you continuity if you purchase a Windows Phone.

It was never about HW, and an Android Phone running on Nokia HW was the only phone people wanted.

MSFT needs to step up in the software business, and open up its ecosystem as it badly needs a footstep in the smartphone OS business.

Seems like good news to BB for me.
smkinoshita
50%
50%
smkinoshita,
User Rank: Light Sabre
7/17/2014 | 9:02:27 PM
Re: Not just employees
I think we're going to see a whole lot more rescrambling, axing, cutting, reorganizing and so on and so forth at Microsoft.  To me, the problem is trying to force the "Microsoft Way" regardless if it's the best idea or even a good idea.  This happened with Internet Explorer, Windows 8, XBox One, and will probably happen with the Windows Phone as well.
Page 1 / 2   >   >>
From The Founder
Light Reading sits down at CES with the head of Cisco's service provider video business, Conrad Clemson, to discuss how NFV and cloud security relate to video, the challenge of managing 4K/8K traffic, the global expansion of Netflix and virtual reality.
Flash Poll
Live Streaming Video
CLOUD / MANAGED SERVICES: Prepping Ethernet for the Cloud
Moderator: Ray LeMaistre Panelists: Jeremy Bye, Leonard Sheahan
LRTV Documentaries
EANTC Tests Nokia IP Routing & Mobile Gateway VNFs for Real World Deployment

2|9|16   |   5:08   |   (0) comments


Nokia obtained validation of its virtualized router and virtualized mobile gateway capabilities through rigorous testing performed by EANTC. The results set a new industry benchmark for outstanding performance, scalability, resiliency and manageability. Nokia VNFs are ready for telco cloud deployment, so that service providers can accelerate mobile, business and ...
Between the CEOs
CEO Chat With Level 3's Jack Waters

2|8|16   |   26:15   |   (1) comment


Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
LRTV Custom TV
The Composable Telco

2|8|16   |   24:46   |   (0) comments


Heavy Reading's Principal Analyst Caroline Chappell presents the keynote at Light Reading's 2020 Vision Executive Summit in Dublin.
LRTV Custom TV
Join Us at the Digital Operations Transformation Summit

2|4|16   |   03:52   |   (0) comments


The Digital Operations Transformation Summit on February 21, 2016 at the Crowne Plaza Barcelona Fira Centre will bring together 50 senior executives to engage in a unique debate on the opportunities and challenges presented by the transformative evolving digital landscape. RSVP now at events@lightreading.com.
LRTV Custom TV
Making the Test: ADVA Ensemble Connector vs. Open vSwitch

2|4|16   |   01:28   |   (0) comments


Light Reading, in partnership with EANTC, recently tested ADVA's Ensemble Connector, which replaces open vSwitch and offers carrier-grade capability and interoperability. The test results strengthen ADVA's credibility as a provider in the virtualization space.
LRTV Custom TV
Bridging the Gap Between PoCs & Deployment in NFV

2|4|16   |   31:50   |   (0) comments


Charlie Ashton of Wind River presents the keynote at Light Reading's 2020 Vision executive summit in Dublin.
Between the CEOs
CEO Chat With Mike Aquino

2|3|16   |   17:34   |   (0) comments


The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Shades of Ray
MWC: Buckle Up for 5G & the IIoT

2|2|16   |   02:28   |   (0) comments


This year's Mobile World Congress looks set to be a 5G land grab and a chance to get down and dirty with the Industrial Internet of Things (IIoT) – but what will the 5G discussions actually be about?
LRTV Custom TV
Case Study: Building China's Next-Gen TV Networks

2|2|16   |   5:01   |   (0) comments


With over 2 billion viewers worldwide, Shenzhen Media Group is one of China's largest content producers. By partnering with Huawei and Sobey, SZMG was able to modernize media operations with the Converged News Center, a production studio that is a model for next-generation workflows.
LRTV Custom TV
Quad Channel Modulator Driver with 46 Gbaud Capability from MACOM

1|28|16   |     |   (0) comments


MACOM's MAOM-003427 is the industry's first surface-mount modulator driver with 46 Gbaud capability to support next generation 200G and 400G applications.
LRTV Custom TV
Video Infographic: Validating Cisco's NFV Infrastructure

1|26|16   |   02:24   |   (1) comment


We all know that the network of the future will be virtual, but when will virtual become a reality? This video infographic covers the four key areas in which Light Reading, in partnership with EANTC, tested Cisco's NFV infrastructure: performance, reliability, multi-service capabilities and single pane of glass management.

For the full report, see

Between the CEOs
CEO Chat With Phil McKinney, CableLabs

1|22|16   |   13:36   |   (1) comment


At CES in Las Vegas, we met with Phil McKinney, CEO of CableLabs. Phil provides an update on the rollout of DOCSIS 3.1, his views on the future of open source and how consumer interest in virtual reality could affect network traffic.
Upcoming Live Events
March 10, 2016, The Cable Center, Denver, CO
April 5, 2016, The Ritz Carlton, Charlotte, NC
May 23, 2016, Austin, TX
May 24-25, 2016, Austin Convention Center, Austin, TX
All Upcoming Live Events
Hot Topics
Google's 5G Radio Ambitions Are Expanding
Dan Jones, Mobile Editor, 2/5/2016
Cincinnati Bell Joins Weight Watchers Club
Alan Breznick, Cable/Video Practice Leader, 2/5/2016
Yahoo & Verizon Sitting in a Tree...
Brian Santo, Senior editor, Test & Measurement / Components, Light Reading, 2/8/2016
Vodafone: Flexible Work Policies Boost Profits
Sarah Thomas, Editorial Operations Director, 2/8/2016
It's Time to Integrate OTT Video
Alan Breznick, Cable/Video Practice Leader, 2/8/2016
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Executive Interviews
Light Reading CEO and founder Steve Saunders sits down with Level 3 Communications' CTO Jack Waters to discuss hot topics like virtualization, 4K and the future of telecom...
The former CEO of Overture Networks, Mike Aquino, discusses why truly open virtualization solutions provide service providers with the greatest choice.
Animals with Phones
Retro Is the Way to Be Click Here
Some animals are too cute for smartphones.
Live Digital Audio

Broadband speeds are ramping up across Europe as the continent, at its own pace, follows North America towards a gigabit society. But there are many steps to take on the road to gigabit broadband availability and a number of technology options that can meet the various requirements of Europe’s high-speed fixed broadband network operators. During this radio show we will look at some of the catalysts for broadband network investments and examine the menu of technology options on offer, including vectoring and G.fast for copper plant evolution and the various deployment possibilities for FTTH/B.