& cplSiteName &

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   >   >>
Light Reading’s Upskill U is a FREE, interactive, online educational resource that delivers must-have education on themes that relate to the overall business transformation taking place in the communications industry.
NEXT COURSE
Wednesday, August 3, 1:00PM EDT
The Central Office Re-Architected as a Data Center
Guru Parulkar, Executive Director, Open Networking Research Center, Open Networking Lab
UPCOMING COURSE SCHEDULE
Wednesday, August 10, 1:00PM EDT
Telcos & Open Source 101
Phil Robb, Senior Technical Director, OpenDaylight
Friday, August 12, 1:00PM EDT
The Role of Open Source in NFV
Jim Fagan, Director, Cloud Practice, Telstra
Wednesday, August 17, 1:00PM EDT
Using Open Source for Data Centers and Cloud Services
Roz Roseboro, Senior Analyst, Heavy Reading
in association with:
From The Founder
Light Reading today starts a new voyage as part of a larger Enterprise.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
LRTV Custom TV
Reinventing Operations for a Virtual, Software-Defined World

7|28|16   |   5:23   |   (0) comments


Heavy Reading Senior Analyst Jim Hodges speaks with Accenture's Larry Socher and Matt Anderson about what service providers must do to transform their business to get the benefits of SDN and NFV including: leveraging DevOps, introducing real-time OSS and implementing analytics.
Women in Comms Introduction Videos
Fujitsu Sales Leader Shares Lessons Learned

7|27|16   |   5:12   |   (0) comments


As Fujitsu's only female sales leader, Annie Bogue knows the importance of asking for what you want, being flexible (she's been relocated five times), keeping a meticulous calendar, 'leaning in,' working harder than everyone else around you, being aware and more.
Telecom Innovators Video Showcase
VeEX Test & Measurement Solutions

7|25|16   |   08:57   |   (0) comments


Cyrille Morelle, president and CEO of VeEX Inc., talks test and measurement with Light Reading's Steve Saunders at BCE 2016. This includes innovative products such as VeSion Cloud-Based platform for network monitoring; MTTplus Modular Test platform for Access, Business, Carrier Ethernet, Transport and Core services; and OPX-BOX+ for Fiber Optics.
LRTV Custom TV
VeEX: Live From BCE 2016

7|25|16   |   03:20   |   (0) comments


VeEX's Senior Director of Business Development, Perry Romano, explains how VeEX provides tools to help install, maintain, monitor and manage network infrastructure efficiently and effectively. The portfolio of products on display include the RXT-6000, MTTplus and TX300s.
LRTV Custom TV
Real-Time Telemetry & Analytics for Intelligent SDN Orchestration

7|25|16   |   03:09   |   (0) comments


Packet Design CEO Scott Sherwood discusses how real-time network telemetry and analytics are enabling a new breed of SDN orchestration applications.
From the Founder
The Russo Report: Driving Disruption

7|25|16   |   07:44   |   (0) comments


In the first episode of a four-part series, Light Reading Founder and CEO Steve Saunders and Calix President and CEO Carl Russo drive around town discussing the disruptive mega-changes in the communications industry and where hope lies for service providers to meet the escalating demands of the cloud.
LRTV Custom TV
NetScout: Maximizing Enterprise Cloud for Digital Transformation

7|20|16   |   04:53   |   (0) comments


Light Reading Editor Mitch Wagner talks to NetScout CMO Jim McNiel about maximizing the benefits of enterprise cloud and digital transformation while minimizing potential pitfalls with a proper monitoring and instrumentation strategy.
Women in Comms Introduction Videos
Ciena's VP Offers a Career Crash Course

7|20|16   |   4:14   |   (2) comments


How did Ciena's Vice President of Sales, Angela Finn, carve out her career path? Simple, she tells WiC. She stayed true to her company, customers and principles. She shares her advice for women on how to be authentic and credible, as well as for companies that want to make a real change to their culture and practices.
LRTV Custom TV
NFV in 2016: Part 2 – Climbing the Virtualization Maturity Curve

7|19|16   |   06:56   |   (0) comments


Many of the initial use case implementations are single-vendor and self-contained. The industry is still climbing the virtualization maturity curve, needing further clarity and stability in the NFV infrastructure (NFVi) and greater availability and choice of virtualized network functions (VNFs). Interoperability between NFVis and VNFs from different vendors ...
Telecom Innovators Video Showcase
Versa Networks' Kumar Mehta on SD-WAN Managed Services

7|19|16   |     |   (0) comments


In Silicon Valley, Steve Saunders sits down with Versa's Kumar Mehta for an interview focused on why service providers are building SD-WAN managed services, and how Versa's telco customers are innovating.
LRTV Custom TV
Juniper Networks & The Evolution of NFV

7|19|16   |   06:01   |   (0) comments


Senior Juniper Networks executives talk to Light Reading Founder & CEO Steve Saunders about NFV developments and the recent independent evaluation by test lab EANTC of Juniper's Cloud CPE solution.
LRTV Interviews
CenturyLink Goes Beyond Managed WiFi

7|19|16   |     |   (0) comments


CenturyLink's managed WiFi allows enterprises, such as retailers and resorts, to track guest WiFi usage in order to help them better communicate with customers.
Upcoming Live Events
September 13-14, 2016, The Curtis Hotel, Denver, CO
November 3, 2016, The Montcalm Marble Arch, London
November 30, 2016, The Westin Times Square, New York City
December 6-8, 2016,
May 16-17, 2017, Austin Convention Center, Austin, TX
All Upcoming Live Events
Infographics
Five of the Top 10 most targeted countries in Check Point Software Technologies' global Malware & Threat Index for Q1 2016 are in Africa.
Hot Topics
Verizon Sports Big Plans for Yahoo
Alan Breznick, Cable/Video Practice Leader, Light Reading, 7/26/2016
Light Reading Beyond
Steve Saunders, CEO and founder, Light Reading, 7/28/2016
Yahoo Signing Off in $4.83B Sale to Verizon
Mari Silbey, Senior Editor, Cable/Video, 7/25/2016
Ericsson Board Has Been Asleep at the Wheel – Consultant
Ray Le Maistre, Editor-in-chief, 7/25/2016
Facebook Gets Its Drone On
Ray Le Maistre, Editor-in-chief, 7/22/2016
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
There's no question that, come 2020, 5G technology will turn the world's conception of what mobile networking is on its head. Within the world of 5G development, Dr. ...
I've enjoyed interviewing many interesting people since I rejoined Light Reading, but William A. "Bill" Owens certainly takes the biscuit, as we say where I come from.
Animals with Phones
Live Digital Audio

Our world has evolved through innovation from the Industrial Revolution of the 1740s to the information age, and it is now entering the Fourth Industrial Revolution, driven by technology. Technology is driving a paradigm shift in the way digital solutions deliver a connected world, changing the way we live, communicate and provide solutions. It can have a powerful impact on how we tackle some of the world’s most pressing problems. In this radio show, Caroline Dowling, President of Communications Infrastructure & Enterprise Computing at Flex, will join Women in Comms Director Sarah Thomas to discuss the impact technology has on society and how it can be a game-changer across the globe; improving lives and creating a smarter world. Dowling, a Cork, Ireland, native and graduate of Harvard Business School's Advanced Management Program, will also discuss her experience managing an international team focused on innovation in an age of high-speed change.