“We view this as another step in the right direction from the Street’s perspective,” he said. “Nadella is not wearing rose-colored glasses.”
In appearances at company and technology events since he took the helm, Nadella has reiterated that the company’s priorities are mobile and cloud products, as he works to shift Microsoft away from its longtime core business of software for personal computers. Nadella has signaled a desire to produce software for rival operating systems, like Apple Inc.’s iOS and Google Inc.’s Android, and has shuffled management in areas like marketing, business development and the Xbox game console.
While Microsoft has implemented smaller, intermittent job cuts in individual businesses -- for example, trimming a few hundred positions in advertising sales and marketing in 2012, and some marketing jobs across the company earlier that same year -- the 39-year-old company has only undertaken a companywide restructuring affecting thousands of workers once before, in 2009, at the start of the recession. Over the course of that year, the company cut 5,800 jobs, or about 5 percent of its workforce at the time.
When Microsoft agreed to acquire the Nokia’s device unit in September, the software maker pledged $600 million in yearly cost savings in the 18 months after the deal closed. People with knowledge of the matter have said that honoring that commitment would probably involve job cuts in areas where the two companies overlapped.
Microsoft’s engineering teams have traditionally been split between program managers, developers and testers. Now, with new cloud-based methods of building software, it often makes sense to have the developers test and fix bugs instead of a separate team of testers, Nadella said in an interview last week after releasing his memo. At the time, he declined to say whether the changes would result in job cuts.
As the technology industry increasingly shifts toward mobile computing and cloud-based services, other technology companies have also sought to keep up by streamlining and firing workers. Hewlett-Packard Co. in May disclosed 16,000 more job cuts after reporting an 11th straight quarter of declining sales, on top of 34,000 in staff reductions already announced. International Business Machines Corp. also started dismissing workers earlier this year as part of a $1 billion restructuring to help it adapt to the industry’s changes.