Microsoft is a company that is undergoing significant change. With a new CEO, a new marching beat and a new hardware unit that makes millions of smartphones per year, the company looks dramatically different compared with a year ago. Unfortunately, as Microsoft has shifted and changed over the last 12 months, the need for further reorganization has arisen and thus, the decision to cut 18,000 jobs from the workforce was made.
It's not all that surprising, given that when Microsoft bought the Nokia mobility arm, it gained 25,000 employees, making some redundancies inevitable, given the overlap of some roles. Indeed, those that joined the company from Nokia will bear the brunt of the layoffs - 12,500 of the jobs to be cut will be former Nokia employees. The cuts extend further into the core of Microsoft as well, with an additional 5,500 jobs to be terminated from other MS departments.
As you would expect, Wall St. is loving the cuts as they see this as a way to streamline the massive tech giant - and with fewer employees, profitability is expected to rise too. Satya Nadella first hinted at these layoffs in his letter last week where he talked about the changing structure of Microsoft and started to lay the groundwork for his 'Mobile First, Cloud First' strategy.
Layoff are never a fun thing to be a part of, and we are sure that the decision was not easy for the Microsoft management. For Microsoft, these types of changes are necessary to keep the company on the correct line of profitability, but that doesn't mean that cutting heads is an easy decision.
Even so, considering that Microsoft remains a very profitable company with billions in the bank, we would expect that the severance packages should be quite good for those employees who are asked to leave the company.