Sat, Jul 19, 2014 - Page 15 News List

New chief executive at Microsoft to cut up to 18,000 jobs in company shake-up

NY Times News Service, SEATTLE

Microsoft Corp is trying to shake off the effects of middle age.

In the latest move by the 39-year-old tech titan to invigorate itself, the company said on Thursday that it was laying off up to 18,000 employees.

The cuts are the first major change made by Microsoft’s new chief executive Satya Nadella, who said the company needed to be more nimble and focused.

The job cuts would be the largest in the company’s history, representing about 14 percent of its workforce.

Most of the cuts — about 12,500 — are set to come from the Nokia mobile phone business Microsoft acquired this year.

Cutting jobs does not mean that the company is to suddenly be able to begin creating products that people love, and the cuts do not suggest a sharp shift in strategy.

NEW START

However, in the view of many Microsoft critics, it is the start of something new, and is a move that could help the company concentrate on businesses where it is likely to have the most impact.

“I think this is a jolt to the culture, which is really needed,” said George Colony, the chief executive of Forrester Research, a technology research firm. “It was frozen in place, and lacked new creativity and innovation.”

Investors have bought into his vision.

The company’s stock, which languished during the tenure of Steven Ballmer, the company’s previous chief executive, is up about 22 percent since Nadella assumed the top job.

On Thursday, its shares hit a 14-year high.

OVERLY BUREAUCRATIC

However, critics of Microsoft, including many former employees, believe the company has become overly bureaucratic and slow-moving.

The company has grown to 127,000 employees worldwide, up from 57,000 a decade ago.

Apple Inc, which is just a year younger than Microsoft, has about 85,000 employees, nearly half of them in its retail stores.

During the first three months of this year, Apple’s revenue and profit were each roughly double those of Microsoft’s.

On Thursday, Nadella said in an e-mail to employees that the layoffs were an effort to move faster, a message he has given repeatedly in recent months.

“Having a clear focus is the start of the journey, not the end,” he said in the e-mail. “The more difficult steps are creating the organization and culture to bring our ambitions to life... The first step to building the right organization for our ambitions is to realign our work force.”

Some investors were hoping for an even bolder move by Nadella, including trimming some product lines.

HARSH SCRUTINY

The company’s investments in the search engine and video game businesses have come under particularly harsh scrutiny, raising questions about whether the company would be better off narrowing its focus to other more lucrative markets.

Nadella did, however, take a scalpel to some projects that were especially far afield from its primary business.

The company said that it was planning to shut down Xbox Entertainment Studios, a group in Santa Monica, California, dedicated to producing original television programming for viewing on Microsoft’s video game system.

Microsoft said it was to complete some programs that were already under way, including two series based on the Halo game franchise.

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