Satya Nadella, Microsoft, Code Conference

Asa Mathat

General


Microsoft is preparing to announce its largest-ever layoffs on Thursday, with cuts coming from across the company, but with the former Nokia business being hardest hit, sources said.

The announcement is expected before the financial markets open on Thursday morning.

Numerically, the layoffs are expected to be the company’s biggest-ever job reduction, surpassing the 5,800 or so workers cut during the 2009 downturn, sources said. However, the layoffs to be announced Thursday are a combination of a strategic shift alluded to in last week’s memo by CEO Satya Nadella as well as delivering on the already promised $600 million in cost savings that the previous management had promised would come from the Nokia acquisition.

A Microsoft representative declined to comment.

By making the Nokia-related cuts and other organizational changes in tandem, Nadella is attempting to demonstrate how quickly and decisively the new regime will act to repair the once leading technology giant. Among his first public events as CEO, Nadella presided over the launch of Office for iPad, a product that had been years in the making but had also been caught up in inter-company squabbles. To date, a touch-centric version of the product is not available on Microsoft’s Surface tablet.

Nadella pledged in last week’s memo that a coming organizational shift would focus on streamlining engineering as well as reshaping the company’s culture.

“As a large company, I think it’s critical to define the core, but it’s important to make smart choices on other businesses in which we can have fundamental impact and success,” Nadella wrote. However, he made clear in the memo that he saw the Xbox as strategic and, in follow-up interviews, he added that Bing remains important as well.

One of the key questions will be how well Nadella is able to use the restructuring to achieve the desired shift in mindset for the company. Will mere cost cuts fundamentally change the culture of Microsoft?

“Nothing is off the table in how we think about shifting our culture to deliver on this core strategy,” he said. “Organizations will change. Mergers and acquisitions will occur. Job responsibilities will evolve. New partnerships will be formed. Tired traditions will be questioned. Our priorities will be adjusted. New skills will be built. New ideas will be heard. New hires will be made. Processes will be simplified.”

With engineering in particular, Nadella has been exploring ways to improve the way products are developed at the company, a process that has already seen shifts in some units, such as Enterprise and Cloud, with more changes likely in other product teams.

Bloomberg reported earlier in the week that the layoffs were looming, with the New York Times saying earlier on Wednesday that the cuts would be announced Thursday.




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