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News that the software giant needed to slim down big time first broke in late June. The actual announcement — plans to cut 18,000 people or about 15 percent of total headcount — came on July 17. About 12,500 of the jobs were axed almost immediately. Now, it looks like the next tranche happens Thursday. Microsoft CEO Satya Nadella had promised to get the cuts done by the end of the year.
To recap: these are big cuts by [company]Microsoft[/company] standards but in the wake of its $7.2 billion acquisition of [company]Nokia[/company] and Nokia’s 25,000 employees, it needed doing. Back in July, Microsoft said it would take a pre-tax charge of $1.1 billion to $1.6 billion over the next four quarters, including $750 million to $800 million to cover severance and benefits for the departing employees.
News of tomorrow’s layoffs comes as Microsoft continues to shake up its board. This week it added Charles Scharf, CEO of [company]Visa[/company] and Teri-List-Stoll, EVP and CFO of [company]Kraft Foods[/company]. David Marquardt, general partner of August Capital and Dina Dublon, former CFO of JPMorgan Chase, are leaving.
These actions, along with John Thompson replacing Bill Gates as chairman and the departure of former Microsoft CEO Steve Ballmer and the inclusion of Mason Morfit, president of [company]ValueAct[/company], an activist investor group, is all viewed as sign of big change at Nadella-led Microsoft.
“We believe the changes in the board are part of a broader re-definition and reorganization of Microsoft as it breaks with its past and transforms itself to support a “mobile-first, Cloud-first” world as well as part of the natural transition to a business defined by Satya Nadella as CEO,” Sanford Bernstein Analyst Mark Moerdler wrote in a research note.