It was clear the axe was going to have to swing when Microsoft bought the once-proud Nokia’s phone business back in April and promised to slash $600m (£351m) per year off costs within 18 months. But the scale of job cuts dwarfs even the most pessimistic of rumours.
The company is axeing 18,000 jobs, 14% of its workforce and by far the biggest layoff in its 39-year history. Nokia is shedding 12,500 of those, a figure that far outstrips the 5,800 redundancies that was grinding out of the rumour mill just yesterday - although reports 1,000 Finnish jobs are going appear to be true, according to the country’s prime minister.
‘Making these decisions to change are difficult, but necessary,’ Satya Nadella, who took over from Steve Ballmer as chief exec a few months ago, wrote in an email to staff (clearly so ‘difficult’ he couldn’t bring himself to title the email ‘18,000 Job Cuts’, opting instead for the euphemistic ‘Starting to Evolve Our Organization and Culture’.
Those getting laid off will be told over the next six months and the cuts will be complete by July next year. The bloodletting will cost between $1.1bn-$1.6bn, including redundancy pay, the company said in a statement. It will also cost the company a huge pool of talent, which some commentators have pointed out will probably be lapped up by Chinese mobile makers.
The announcement comes a day after former rivals IBM and Apple said they were teaming up to target business customers - a blow for Microsoft, which has made selling its cloud-based products to corporates a new strategic priority since Nadella took over.
And it’s not the only PC pioneer slimming down: HP is in the midst of lopping 50,000 off its 250,000-strong workforce, Intel and Cisco are cutting 5% of jobs and IBM itself could lay off 13,000 people, 3% of its staff. It’s a game of phones alright.