July 18, 2014 10:41:05 AM
LOS ANGELES -- Microsoft announced the biggest layoffs in its 39-year history Thursday, outlining plans to cut 18,000 jobs in a move that marked the CEO's sharpest pivot yet away from his predecessor's drive for the company to make its own devices.
Although some cuts had been expected ever since Microsoft acquired Nokia's mobile-device unit, the number amounted to 14 percent of the Microsoft workforce -- about twice what analysts had estimated.
The cuts will include some 12,500 jobs associated with the Nokia unit -- nearly half of the 28,000 employees Microsoft brought on board in April through the acquisition.
When the cuts are complete, the company will still have about 10,000 more employees than before the Nokia acquisition, with an overall headcount of 109,000.
In a public email to employees, CEO Satya Nadella said the changes were needed for the company to "become more agile and move faster." The move also pushes Nokia to focus solely on the Windows Phone operating system.
Nadella is clearly backing away from former CEO Steve Ballmer's strategy of getting Microsoft to make its own smartphones and tablets.
"He's making a pretty serious game-changing strategy move away from hardware," said Michael Turits, managing director of equity research for financial services company Raymond James & Associates.
Nadella indicated that Microsoft will largely abandon low-price Nokia Asha phones -- which work on their own non-Windows operating system -- and reverse a strategically questionable move by Nokia in February to launch a line of phones called "X'' that supported rival Google Inc.'s Android platform.
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