Microsoft confirms massive layoffs

microsoft-open-sourceSoftware company Microsoft said today it will lay off seven percent of its workforce, and put 7,800 people onto the dole queue.

It also said it will write off $7.6 billion related to its acquisition of Nokia’s phone business last year, prompting serious questions – asked at the time – as to why it ever took over the unit in the first place.  Microsoft’s strength is not in smartphones and it has a tiny share of the market, just like Intel.

Microsoft is now engaged in an energetic move to re-engineer its businesses. Satya Nadella, the company’s CEO,  said he was expecting to cut 18,000 jobs at Microsoft  but these 7,800 jobs are incremental to that total.

Over a third of the redundancies will happen in Finland, the home of Nokia.

Microsoft finds itself between a rock and a hard place and is finding it hard to pitch itself as a cloud company because there are already powerful players in that sector and the Redmond company is rather late to the game, compared to Amazon and to IBM.

The firm will announce its fourth quarter financial results later this month and will include a “restructuring” charge of close to $800 million. “Restructuring” means compensation Microsoft will have to pay to the people it has put out of work.

But job cuts are welcome on Wall Street – Microsoft’s share price rose today on confirmation of the additional loss of jobs.