Microsoft's Layoffs Are Not Yet Done

As if the news pouring out from Microsoft, and from analysts covering Microsoft, wasn’t bad enough this week, here’s another little tidbit: the massive layoff of 18,000 people Microsoft announced in July is not yet over.

The company still has about 500 more jobs to cut, it confirmed in Monday’s regulatory filing.

Microsoft has said all along that this layoff process could drag on until June, the end of its current fiscal year. It’s still on track to wrap this layoff up at that time.

We understand from sources close to the company that the layoff in October was the last biggie and that virtually all of the business units, engineering and product teams are done with layoffs, with final teams in place.

Microsoft conducted the biggest chunk of the layoff right away in July, slicing 13,000 from the payroll the day it announced its layoff. In September it cut about 2,100 people and another 3,000 in October.

Most of the people let go, 12,500, came from Microsoft’s newly acquired Nokia business. And most of those came from Nokia’s feature phone manufacturing. Microsoft bought Nokia to ensure it had at least solid maker of Windows smartphones as it tries to compete against iPhone and Android, and wasn’t interested in running a feature mobile phone business, which was a big part of Nokia when Microsoft acquired it.

But CEO Satya Nadella also used this layoff to restructure just about every other team, changing the organizational structure of how Microsoft builds products to bring products to market faster.

On Monday, on the quarterly conference call with analysts, CFO Amy Hood explained:

Our integration and restructuring efforts have been focused on optimising resources across the company which includes reducing the expense base in our phone business. To date, we have integrated the manufacturing and supply chain teams across Microsoft while also rationalizing our phone manufacturing capacity.

Microsoft on Monday said that 17,500 employees had been let go and confirmed, again, the remaining 500 would be complete by June:

In July 2014, we announced a restructuring plan to simplify our organisation and align NDS with our company’s overall strategy (the “Restructuring Plan”). Pursuant to the Restructuring Plan, we will eliminate up to 18,000 positions in the current fiscal year, including approximately 12,500 professional and factory positions related to the NDS business. The actions associated with the Restructuring Plan are expected to be completed by June 30, 2015.

We incurred restructuring charges of $US132 million and $US1.2 billion during the three and six months ended December 31, 2014, respectively, including severance expenses and other reorganization costs, primarily associated with our facilities consolidation. As of December 31, 2014, we have notified approximately 17,500 employees of their job elimination, entered into mutually agreed separations, or commenced required consultation processes, and recognised substantially all anticipated severance charges for the 18,000 positions in the Restructuring Plan.

A Microsoft spokesperson also told us, “As we stated in October, we are on track to complete the reductions associated with our Restructuring Plan by the end of the fiscal year.”

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