“Nadella is not wearing rose-colored glasses.”
— Daniel Ives, analyst at FBR Capital Markets, on Microsoft CEO Satya Nadella’s announcement today that he’s laying off 18,000 employees in the next year. Ives said the software company — which has seen big competitors such as Apple and Google grow faster and stronger as the computing industry has evolved — “needs to be a leaner tech giant over the coming years in order to strike the right balance of growth and profitability around its cloud and mobile endeavors.”
The news is no surprise; as we wrote last week, a Nadella memo to employees foretold big changes. Nadella, who five months ago replaced longtime CEO Steve Ballmer, is making the biggest cuts in the company’s history. Microsoft grew to 127,000 employees in April after it added 25,000 workers as a result of its purchase of Nokia’s handset business. Until now, the biggest cuts at Microsoft came in 2009, when Ballmer slashed about 5,800 jobs, according to Reuters.
In a memo to employees posted on Microsoft’s website today Nadella said “our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment.” He said there will be fewer layers of management, and he stressed the need to become “more agile” and “move faster.”
Photo from Reuters archives