Following weeks of talk about "tough choices" ahead for Microsoft, CEO Satya Nadella announced today that the Redmond, Wash., tech giant is in the midst of eliminating more than 6.5 percent of the company's workforce, or 7,800 positions. As of March 31, 118,584 employees worked at Microsoft.
In a July 8 email to employees, Nadella wrote, "I want to update you on decisions impacting our phone business and share more on last week's mapping and display advertising announcements." Last week, it was revealed that Uber is snapping up Microsoft's Bing mapping tech and AOL will take over Microsoft's online advertising business in nine markets.
"We anticipate that these changes, in addition to other headcount alignment changes, will result in the reduction of up to 7,800 positions globally, primarily in our phone business," Nadella continued. "We expect that the reductions will take place over the next several months.
"I don't take changes in plans like these lightly, given that they affect the lives of people who have made an impact at Microsoft," he stated.
The company's finances will be affected by a planned $7.6 billion impairment charge and a restructuring charge of up to $850 million related to the acquisition of Nokia's Devices and Services businesses. The deal, completed in April 24, was worth approximately $7 billion at the time.
Going forward, the Microsoft Windows and Devices Group will focus on three types of customer segments, Nadella said. "We'll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they'll love."
In a separate July 8 announcement, Nadella said Microsoft is "moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family. In the near-term, we'll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility."
Meanwhile, Microsoft will be relying more heavily on third parties after transferring its mapping tech to Uber.
"We will continue to source base mapping data and imagery from partners," Nadella said. "This allows us to focus our efforts on delivering great map products such as Bing Maps, Maps app for Windows and our Bing Maps for Enterprise APIs."
Finally, unburdened by online display advertising, Microsoft can turn its attention to its improving search business, which Nadella described as core to the company's "efforts spanning Bing.com, Cortana, Office 365, Windows 10 and Azure services."
Microsoft over the years has inked search deals with major Internet companies. "Bing will now power search and search advertising across the AOL portfolio of sites, in addition to the partnerships we already have with Yahoo!, Amazon and Apple," Nadella noted. "Concentrating on search will help us further accelerate the progress we've been making over the past six years."
According to the company's figures, Bing's share of U.S. searches grew to 20 percent over the last 12 months. Search advertising sales grew 28 percent during that time.