Microsoft Layoffs Could Make Seattle Hub Of Cloud And Mobile Tech

Jul 17, 2014

Microsoft CEO Satya Nadella
Microsoft CEO Satya Nadella
Credit Courtesy of Microsoft

Following the announcement by Microsoft CEO Satya Nadella that the company would undergo a 14 percent reduction in its workforce, conference rooms at the Redmond campus were reserved by the human resources.

Nadella told workers about the layoffs in a public email on Thursday morning, saying that it’s part of a plan to make the 39-year-old company more agile and productive.

The software giant will cut up to 18,000 jobs in the next year. From the Puget Sound area, 1,351 jobs will be cut, or about 3 percent of the company’s current full-time employee corps in the Puget Sound area.

The aim, Nadella told employees by email, is to cut down on management and fold in the $7.3 billion Nokia cell phone business it bought in April.

With the Nokia purchase came 25,000 employees, many based in Finland. Microsoft will likely lay off 12,500 of those employees.

Todd Bishop of the tech site, GeekWire, spoke with KUOW’s Bill Radke about the announcement.

“Microsoft is still trying to transition from these long software development cycles to these much faster engineering cycles,” Bishop said. “Releasing to the web every week or every month and really competing much more aggressively against the Googles of the world.”

Nadella has also said he wants to evolve into a “mobile-first and cloud-first world.” Seattle, Bishop said, is in an interesting position to become the hub of mobile and cloud-based technology.

“Not only is Microsoft here, but it’s becoming a viable competitor,” Bishop said, noting Amazon web services based in South Lake Union. “If Microsoft can become a leader, it could be an area of growth for the company and the region overall.”   

Bishop said the move is more for the company than investors. Microsoft chose Nadella in part because of his engineering background to focus on the process.

In an email last week, Nadella told employees that Microsoft will focus on productivity and platforms. Microsoft started moving in that direction five months ago and has moved into the iPad realm by creating Office for the Apple tablet and making Windows more easily accessible across devices.  

“At our core Microsoft is the productivity and platform company for the mobile-first and cloud-first world,” Nadella said. “We will reinvent productivity to empower every person and every organization on the planet to do more and achieve more.”

Microsoft wants to focus more on its products that will help the company in the market, said Nick Wingfield of The New York Times. Wingfield is the newspaper’s Seattle-based tech reporter.

He said this is a sign that Nadella, who took over from Steve Ballmer in February, “plans to take some bold actions.”

It’s a sad consequence of layoffs that they get investors excited, Wingfield said. “The thing that will really make a difference is to make products that people really love.”

The announcement, made before the opening bell on Wall Street, sent Microsoft stocks up 3 percent.

The layoffs will cost Microsoft. The company announced Thursday that it will incur pre-tax charges of $1.1 billion to $1.6 billion for severance and benefit costs over the next four quarters.

Nadella said he would give more details when Redmond, Washington-based Microsoft reports fiscal 2014 results on Tuesday.