Microsoft to slash 18,000 jobs over the next year

July 17, 2014, 12:35 PM UTC
Photograph by Justin Sullivan—Getty Images

Microsoft is slashing 18,000 jobs over the next year, trimming its workforce by roughly 14%, a substantial move to cut jobs as the software giant faces great pressure in a world that lives by mobile devices rather than the PCs where the software giant has traditionally dominated.

The job cuts at Microsoft (MSFT) come about six months after the software giant named company veteran Satya Nadella as its third chief executive since the company was founded in 1975. Today, Microsoft continues to churn out profits, but faces competition across all fronts of its business as consumers and businesses shift more computing chores to the Web, tablets and smartphones.

In a letter to employees, Nadella said the company is now moving to cut about 13,000 of those jobs, and intends to notify “the vast majority” of employees whose jobs will be eliminated over the next six months. Of the total job cuts Microsoft unveiled on Thursday, about 12,500 of them are related to the company’s acquisition of the mobile phone business of Finnish-based Nokia Oyj.

The news was anticipated earlier this week, when reports suggested Nadella may cut thousands of jobs to meet costs savings targets from the Nokia deal. The cull appears to be the largest in the company’s history, topping the 5,800 jobs it cut in 2009 as the financial crisis took its toll on the economy. Microsoft currently employs over 125,000 people.

“My promise to you is that we will go through this process in the most thoughtful and transparent way possible,” said Nadella in an e-mail sent to all Microsoft employees.

The company expects to incur pretax charges of $1.1 billion to $1.6 billion over the next four quarters, Microsoft said in a separate statement. Those charges include $750 million to $800 million for severance and other benefit costs, and $350 million to $800 million in asset-related charges.

Microsoft intends to offer severance to all employees affected by the job cuts, as well as job transition help for many. The job cuts will affect both the Microsoft workforce and the company’s vendor staff.