Microsoft To Cut Up To 18,000 Jobs; 1,351 In Puget Sound Area

Jul 17, 2014

Microsoft says it will cut up to 18,000 jobs in what observers are calling the company's largest layoff ever. The news came in an e-mail from CEO Satya Nadella.

Of those layoffs, 1,351 will be in the Puget Sound region. About 43,000 people work for Microsoft in this area.

A spokesman says the company has begun the layoff process for about 13,000 of the 18,000 expected cuts. A number of the cuts are expected to come as Microsoft integrates the Finnish company Nokia, which it acquired in a deal announced last fall. The deal boosted Microsoft's employee headcount from about 99,000 last year to about 127,000 as of last month.

"So what they're doing now is reducing a lot of the quote-unquote redundancies that they had with regard to manufacturing, design, engineering, project planning, that sort of thing," said Norman Young, a senior analyst at Morningstar in Chicago. "They're shutting down factories they no longer need, and they're getting rid of designers that they probably already had in the U.S., ... that sort of thing."

As of 8:15 a.m. PDT, Microsoft (MSFT) shares were up slightly over Wednesday's close. Young says the layoffs might not make a big difference in the short term, but could pay off as time passes.

"It will help them compete better in a world where, frankly, they're no longer the 800-pound gorilla," Young said. "They're the guys who are actually the challengers in a few of these categories now."