The Impact of Microsoft Corporation (MSFT)’s 18,000 Job Cuts

Microsoft Corporation (NASDAQ:MSFT) announcement that it will eliminate up to 18,000 jobs has caused shockwaves in the company especially so, on Nokia where two-thirds of the cuts are to be carried out. The restructuring is set to affect 14% of the company’s workforce including 12,500 jobs at Nokia. The cuts will affect 5% of Microsoft pre-Nokia workforce which according to Nomura Securities managing director, Rick Sherlund, in an interview on CNBC will substantially trim Nokia operational costs.

most valuable brands in 2013

“It is a pretty bold move and i think what it does, it signals that Microsoft is not going to get in a slippery slope with Nokia. They are actually going to trim the Nokia cost structure very substantially,” said Sherlund.

Microsoft Corporation (NASDAQ:MSFT) investors were worried that acquisition of Nokia Corporation (ADR) (NYSE:NOK) would affect the company’s earnings on the fact that it was on a slippery slope in terms of its earnings amidst increased competition on the smartphone business. The latest job cuts according to Sherlund will considerably reduce the operation cost in the hardware space.

The major concern going forward is whether Microsoft Corporation (NASDAQ:MSFT) will be able to gain relevance in the cloud space as it has done in the past on the enterprise segment. The company’s CEO has emphasized that the company is now more than ever focused on the cloud rather than tradition hardware business that has felt the full force of increased competition.

The latest job cuts affect half of Nokia Corporation (ADR) (NYSE:NOK) workforce highlighting the fact that Microsoft is trying to make a statement on its hardware business. The huge cuts do not come as a surprise to CNBC’s Jon Fortt especially on the Nokia Corporation (ADR) (NYSE:NOK) side considering it has performed dismally on the smartphone space. Mr. Frott also believes that Nadella has taken advantage of the latest cuts to reduce the workforce at Microsoft.

“I was saying a couple of days ago that it would be interesting to see whether Satya Nadella takes advantage of this moment of cutbacks to not only affect Nokia but the rest of Microsoft Corporation (NASDAQ:MSFT)  and put his stamp on that,” said Mr. Fortt

The latest cuts come as Microsoft Corporation (NASDAQ:MSFT) CEO emphasized on the need to restructure the way company performs in terms of team work as well as reducing on middle management.

Disclosure: none

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!