Microsoft Looks to Cut Up to 18,000 Jobs

http://recode.net/2014/07/17/ax-falls-at-microsoft-as-company-looks-to-cut-18000-jobs-this-year/

by whiteacid • 12 years ago

338 320 12 years ago

sz4kerto5• 12 years ago

MSFT pre-market at $45 at the moment -- higher than anytime in the last decade. There are big expectations towards Nadella -- we need to see groundbreaking strategy changes to justify this. Exciting times.

chton• 12 years ago

I'm not sure how this fits into a big strategy change. It mostly seems like really eliminating redundancy, that's why most of the firings are in the Nokia department. They've recently acquired that, so there are bound to be lots of people there that do jobs that were already filled at Microsoft. That would be more than enough to justify it, at least to stockholders.

TheOtherHobbes3• 12 years ago

This is Mammoth Management - you stomp around looking big and hairy and making trumpeting noises, and then you become extinct.

anjc• 12 years ago

He's talking about cultural alignment in the mail, and there's no reason to assume that that's not the reasoning behind the Nokia layoffs. Acquisitions and mergers are very difficult to get right, particularly in terms of culture. If there's a cultural gap between the two companies, then the layoffs for the acquirer probably make sense.

k2enemy• 12 years ago

And now, every day for a year, everyone gets to wake up and wonder if this is the day that they will get laid off.

Why can't they wait and make the announcement once they know who they will eliminate and do it in one swift action? Why put people in limbo for a year?

67726e• 12 years ago

I'm assuming that an announcement like this could effect stock prices. I have no knowledge of stock trading at all, but I would assume they would announce something like this if they expected it to have a positive effect.

kabdib2• 12 years ago

Stock is up over 45 now . . .

Getting rid of dead wood is a great idea. Tons of middle management there, just sitting for years and causing obstructive damage.

mattzito• 12 years ago

It's actually an attempt to try to be smart about letting people go.

Sure, yes, they could come up with a master list and just pull the trigger today. But the odds of sweeping up a huge number of "false positives" grow considerably.

The idea behind waiting is that along with these layoffs are a lot of restructuring work - teams get moved around, some people actually get promoted, newly manager-less teams are absorbed by another team, etc.

When that happens, there will be a certain number of people who might have been underperforming that start to thrive, possibly because of having a better manager, or because they're more interested in their new group, etc. Other people who might have been coasting by and taking up space but getting decent reviews might suddenly be under a better manager and have no where to hide.

But basically, you can do layoffs, restructure, and then in 6 months time re-evaluate.

Typically, barring one-off events, they'll do several rounds here, a few months apart. Done properly, it won't be an every day worry, it'll be a concern 2-3 times over the next year.

Gracana• 12 years ago

Seems like this looming threat/uncertainty might also cause people to leave of their own accord. I don't know if that's the strategy, but I could see it being a desirable alternative to actually laying people off.

rayiner3• 12 years ago

That's plausible, but also plausible is that the drawn-out process causes the better performers to leave while they can.

It's easy to say from the outside that the layoffs will hit underperformers and people who are just coasting, but the fact is that layoffs of this scale inevitably involve politics. We're talking about an organization that had so much trouble getting the Office people on the same page as the Mobile people that they launched a make-or-break product (Surface) with a buggy beta version of its killer feature (Office). You think that organizational dysfunction won't extend to the restructuring process itself?

At least if you do them and get them done quickly, the people you want to keep know where they stand.

radicalbyte• 12 years ago

The downside is that the second this kind of thing gets announced, the good people start to jump ship.

Scuds2• 12 years ago

The idea behind waiting is that along with these layoffs are a lot of restructuring work - teams get moved around, some people actually get promoted, newly manager-less teams are absorbed by another team, etc.

or people can get re-hired on as v- contractors or moved to other parts within the company. It's not like other MS employees haven't left and started their own firms using MS technologies.

dasil003• 12 years ago

How do you propose a corporation the size of Microsoft decide who to fire without it leaking internally that layoffs are coming? It would have to be an incredibly coarse-grained and thus terrible decision.

Besides, I fail to the see the logic that advance warning isn't objectively good. If you're going to be laid off it's better to have some additional time on the job before your severance, even if there's uncertainty. And besides, how much peace of mind did employees at Microsoft have anyway? If they were paying any attention at all to how the company is doing everyone at the company had to see that layoffs and restructuring were inevitable sooner or later anyway.

tgeorge• 12 years ago

This is where the Bob's come in...

pparkkin• 12 years ago

Some countries' legislation requires a company to express intent to let people go before being able to go ahead with it. Also some of the legalities may make it impossible to know beforehand who specifically will be let go when the time comes.

Look into co-determination in Finland for an example. Finland of course is also a big part of the news from Microsoft today.

netcan• 12 years ago

My guess would be that laying off this many is a big hairy job. A lot of people need to be involved. They would all need to know about it.

Keeping it secret is a lost cause. There would be rumors and theories and half truths flying around.

plerophoria• 12 years ago

Personally I'd much rather hear about a potential layoff far in advance. It would give me a chance to prepare financially and start looking at new jobs.

cordite• 12 years ago

Generally that's what severance time or packages are for.

I often hear 1-3 months of employment and or pay over the time, giving hopefully adequate time to prepare.

makecheck• 12 years ago

Companies announcing "X" layoffs typically don't need to lay off "X" people, they actually need to lay off "X + N" people; they are counting on attrition following such an announcement to quietly make up the difference. That makes the press (slightly) better, and the people who quit because they sense a sinking ship, etc. won't cost the company in severance packages either.

marcosdumay• 12 years ago

It's funny to see all those people on HN talking about "redundancy" and "letting people quit on their own", as if people were perfectly fungible - and in a software company!

Yep, I'm sure they'll save a lot in severance when their best people quit.

outside12345• 12 years ago

Microsoft employee here: I took this exactly the opposite way. I know I'm valuable, I know many others aren't (sorry: being honest) and this is a good thing from my perspective because at Microsoft we are finally facing reality and getting the right people in place.

My only gripe is that the layoffs are not larger - we need about 20% of the marketing folks and 20% of the program managers that we currently have. I would cut deeply in those disciplines as well and then Page-style cut all of the deadwood non-strategic low-revenue projects (and there are a lot of them).

Laying off Terry Myerson (Windows) and Kevin Turner (chief hacker culture killer) would be a great improvement as well - they are both cancers.

ww520• 12 years ago

Letting 80% marketing and PM go? Wow. I thought PM are pretty good in Microsoft.

72deluxe18• 12 years ago

What's wrong with Terry and Kevin?

Was Terry responsible for the compartmentalisation of Exchange to permit it to spread across different machines, each with different roles? Good idea but I found 2010 bloated compared to 2003, I skipped 2008 (and NOBODY tested 2010 SP2 did they???? That bust everything for me, and on an Exchange instance on one machine only; I can only imagine how it was for spread installations).

Are there really that many little projects? How big is the Office team?

throwaway012• 12 years ago

MS employee here as well. They both aren't going anywhere, KT more-so; he's well respected among the leadership and SMSG has grown exponentially under his watch.

grecy• 12 years ago

If 80% of Marketing go, I'll eat my shoe.

Actually, I'll be shocked if 10% of Marketing go.

What you're forgetting is those are the people that are best at justifying their own existence.

johnward• 12 years ago

In my experience with our last acquisition some of the best performers ended being cut just because they were in the wrong area. So if MS actually evaluates each employee I would be surprised. It usually just comes down to numbers. We need to save X and that means eliminate Y people. Here's a list.

For example. We got acquired. New companies decides we need to cut some of our staff. They get rid of a co-worker who is solely responsible for training companies to work with our product. His pay was way under market anyway so they didn't save much letting him go. Then he goes and gets a job making double with better benefits doing training. Then a few weeks later our group is scrambling to find someone, anyone, capable of delivering customer training....

AUmrysh• 12 years ago

I'd rather know ahead of time so I could start finding a new employer.

easymovet• 12 years ago

It means less severance packages will have to be paid out because a lot of people won't want to be in limbo and will resign on their own first.

frou_dh2• 12 years ago

    Subject: Starting to Evolve Our Organization and Culture

    Body: Last week in my email to you I synthesized our strategic direction ...

Christ.

sz4kerto5• 12 years ago

When you fire that many people, then this is the tone you use, unfortunately. It's not specific (so people won't be able to argue that they're really needed, etc.), it does not have any negative statements (no blame on people who're let go), it not personal (Nadella cannot and should not express any strong positive or negative personal feelings about the event).

It can be a disgusting read, but everybody does that in a situation like this -- with a reason.

worldpeace3• 12 years ago

Everyone talks like 'Last week in my email to you I synthesized our strategic direction'?

This guy is trying too hard to sound smart. Everything that's written by him reads like a try-hard freshman English major.

shubb• 12 years ago

Maybe they can't write it in a personal way because as long as they treat it as a technical process, they don't feel responsible.

Even CEOs need to feel like a cog in a machine sometimes...

duiker1012• 12 years ago

Ok, I don't get it, what am I missing?

meowface3• 12 years ago

Sugarcoating mass layoffs with "evolve", "culture", "synthesized", "strategic direction"...

weavie2• 12 years ago

It's the sort of management email that I would read with my internal management spam filter fully engaged. I would probably get to the end and delete it without even taking in what he was saying.

pxlpshr• 12 years ago

Instead of writing "Christ", you should consider posting an email as if you were the one newly responsible for a $364B company and a reduction in 18,000 jobs.

I'd be curious to see other people's management style from their armchair.

NoMoreNicksLeft2• 12 years ago

Subject: Important Company-wide Announcement

Dear Employees,

For our business to continue running, we must reduce the number of staff. This is an unfortunate but also inevitable reality.

[insert details of layoff here]

[insert honest platitudes]

Senior management wishes all of you the best of luck, and has every confidence that you will be even more successful at your next job.

frou_dh2• 12 years ago

I would spontaneously combust if I were responsible for a $364B company on a good day, never mind deciding how layoffs should be done. It's just surprising that parody-level corporate-speak still gets used despite having being derided for years in mainstream press and conversation.

rayiner3• 12 years ago

That's a thinly-veiled appeal to authority.

htormey• 12 years ago

In my opinion, this is a pretty good critique of his writing style along with some constructive suggestions on how to improve it:

http://www.mondaynote.com/2014/07/13/microsofts-new-ceo-need...

harryh• 12 years ago

A great blog post on this topic:

http://www.bhorowitz.com/the_right_way_to_lay_people_off

Though it's advice aimed at much much smaller companies than Microsoft it still resonates. Also I bet HN readers are much more likely to have to one day lay off 18 people than 18,000.

sumedh• 12 years ago

you should consider posting an email as if you were the one newly responsible

For starters, I would not use the word "synthesized" in my email.

SandB0x• 12 years ago

Here's my attempt at removing some of the worst fluff from the email:

Last week in my email to you I outlined our direction as a productivity and platform company. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments. The first step to building the right organization is to make changes to our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.

It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company.

Later today your Senior Leadership Team member will share more on what to expect in your organization. Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration.

First, we will simplify the way we work to drive greater accountability and move faster. We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. Our business processes and support models will be more lean and efficient with greater trust between teams. These changes will affect both the Microsoft workforce and our vendor staff.

Second, we are working to integrate the Nokia Devices and Services teams into Microsoft, completing the acquisition announced last September. To win in the higher price tiers with our first-party phone portfolio, we will focus on design and technical innovation. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps.

Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind.

sanderjd2• 12 years ago

Thanks, that was great. Your version is clear and to the point without losing anything. It really makes me wonder why corporate messages are so often written in such a strange style. It clearly isn't necessary, and often ticks people off.

callil• 12 years ago

I was just thinking of doing this yesterday, you should email it to him! Could be fun to try to do this for all overly wordy corporate email/announcements.

ssmoot2• 12 years ago

Making the public earnings call the centerpiece seems like a real bad morale move. If I were a 'Softie it would be a strong signal where the leadership's priorities lie (stock price). It gives the talk of "lean" and "accountability" a decidedly negative undertone IMO.

I do like the line about "the respect they deserve" without qualifier. It adds a bit of humanity to the whole thing.

But not enough overall IMO. It really leaves me with the impression that this is just typical corporate speak trying to put the stock price ahead of the mentions of "design and technical innovation".

blt• 12 years ago

Hemingway App (http://www.hemingwayapp.com/) gives it a medium rating of Grade 12. I would have expected worse. I guess there are no truly awful sentences, and the app doesn't measure its general overuse of big words.

pliptvo3• 12 years ago

Litteraly.

jobu• 12 years ago

I'm just thankful I don't work at either of those companies. 18,000 is a huge number and a big blow to company morale, but that letter is the icing on the cake. The corporate sleaze speak was extremely thick, and while Nadella did avoid the term "headcount" he never referred to any of those laid off as "people" (only jobs, roles, workers, positions).

At the very least he could've added a thankyou for your hard work, or an apology to those that no longer have a job.

mavdi2• 12 years ago

Ouch...

forgotAgain• 12 years ago

Too many words. He needs to drop the self absorbed thought leader babble and communicate in a straight forward manner.

mavdi2• 12 years ago

Indeed. None of the words in his company wide email meant 18000 job cuts to me. Just a neutral line of babble in that email. Terrible leadership to start with

Anderkent3• 12 years ago

Uhm, how about

The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months.

That says '18000 job cuts' pretty clearly to me.

The rest is general high-level direction because 1. that's probably the only thing they have right now, it takes time to work out detailed restructuring, 2. that's the level at which high level managers operate - fuzzy strategic directives, up to lower-level management to implement them in specific ways.

blumkvist• 12 years ago

It's a GREAT email. Firing 18000 people is a much more complicated process than you can imagine and requires very delicate maneuvering in your communication. He has to craft his message with 18,000 different people and their possible interpretation of every word he writes.

maccard2• 12 years ago

So, how do you tell a workforce of X people that 18000 jobs are going to be cut?

meowface3• 12 years ago

I synthesized our strategic direction
focusing our innovation investments
our work toward synergies and strategic alignment
Nokia Devices and Services integration synergies and strategic alignment
simplify the way we work to drive greater accountability, become more agile and move faster
Thank you for your support as we start to take steps forward in evolving our organization and culture

You can't make this shit up. It's straight out of Dilbert.

pfortuny• 12 years ago

Well, it has probably been overseen in case of Copyright infringement. That is why "synergies and strategic alignment" is repeated.

Unbelievable how "We have decided our business requires 18000 less employees than there are now" can be strategically and synergetically rephrased and aligned.

Culture, ah, culture.

Systemic332• 12 years ago

I'm not very impressed with the choice of Nadella so far, he seems too deep into MS culture to be able to see clearly. But only time will tell, it's still to early to give a verdict.

Infinitesimus3• 12 years ago

Do you care to explain more why you think he can't see clearly? I'm curious about your reasons for the statement. From my limited outside perspective, these layoffs are a good idea since there's bound to be a lot of redundancy and inefficiently in a company of this size

Systemic332• 12 years ago

Based on the letter he recently sent out, it's extremely long considering the intended receiver (everyone), and you need to read it several times before you fully understand it. Which resulted in big newspapers not agreeing how it was to be understood (eg. Was Xbox a core business, or not) This layoff round was kinda expected.

worldpeace3• 12 years ago

His writing is shit. Compare his writing to anything from Bezos or Cook.

brador• 12 years ago

Looking forward to the wave of cool startups this will create!

domiono• 12 years ago

Interesting, especially since a severage package of $30k-$50k or how much ever it is, is basically like a seed funding round for each employee that is let go. Could be interesting...Microsoft Mafia :)

shaydoc4• 12 years ago

This is a company with a net profit margin of 27.74% in Q1 2014.

Infinitesimus3• 12 years ago

Layoffs aren't always about profit though. In this case, it is more about streamlining and making MS more agile

shaydoc4• 12 years ago

How does laying off 18,000 people make you more "agile" ? Products that sell make you more "agile"... Its more a case of, we bought Nokia for their market, but we don't need their staff!

worldpeace3• 12 years ago

Does anybody really believe that's going to be the result of this? This is just laying off the people they acquired from that $7.2 billion Nokia acquisition.

varelse• 12 years ago

Because the layoffs at AMD made them the market leader they are today!!!

ivanche• 12 years ago

"Following the Nokia acquisition, completed in April, Microsoft had roughly 127,104 employees[...]"

I don't have knowledge about managing a company, but is it at all possible to efficiently lead 127000+ employees? Has MSFT become a non-manageable behemoth?

CSMastermind2• 12 years ago

There are lots of companies with more than 127,104 employees that manage just fine. Boing across the street for instance. The reason for the cuts is two fold. First, Microsoft acquired Nokia and they're going to let go of all of most of the non-engineering staff, as well as a lot of the management. Second, Microsoft just restructured itself. It used to run like a conglomerate with VP essentially running their individual business like a fifedom ala the organizational chart comic (http://www.kaushik.net/avinash/wp-content/uploads/2012/08/or...). Over the last 3 years there's been a series of high profile executives let go with the intent of increasing cooperation between the divisions, then last year the company restructured going from 9(?) divisions down to 4. As a result there's a lot of redundant people and teams. This house cleaning is in part a result of that.

samolang• 12 years ago

That's almost 15% of the company.

smackfu4• 12 years ago

Has anyone been inside the process for determining the number of layoffs in a situation like this? Is the goal to cut payroll to a certain number, or what?

kasey_junk2• 12 years ago

I worked for a time doing "transitional project management" read "once we acquire you, figure out what we are keeping and jettison the rest". For a company that wasn't the size of Microsoft but grew through acquisition to be quite large.

In that particular case, which may or may not have any similarity to this incident, layoffs were determined in 2 ways

A) if you had 2 redundant or similar operational centers you got rid of the most expensive one unless there was some compelling reason not to (huge client demanded they stay, or they were more expensive but dramatically more efficient)

B) technology centers the goal was to integrate what had to be integrated as fast as possible. 80% of the time this meant literally telling people they wouldn't have the same functionality after the acquisition and getting rid of the entire support team. Occasionally, you would find some piece of technology that was great and easily integrated into the rest of the systems and that support team would be given good terms to stay until that was done. Very rarely you would find some piece of technology that was newly vital and hard to integrate, in that case you'd keep a skeleton crew to keep it operational, but you knew that it wasn't going to get any new resources and if it ever become non-vital that team was gone as well.

For point A) above, I've literally seen the decision come down to the cost per square foot of the office space. I've never been in a situation where they had a predetermined number they had to get to though. The number was a natural calculation based on the above.

suls• 12 years ago

"[..] In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. [..]"

At least on concrete and positive note in his email. Wondering if that tripled the initial estimate of 6k cuts.

mattbrewsbytes• 12 years ago

Looks like about 15% of their employees, although 10% will be former Nokia folks.

This has to be part of a multi-year effort to reformat the company. I would expect that there are going to be soft costs that have multi-year impacts. People left behind having to take on more work without necessarily any incentive.

With numbers this high, there will be some degree of randomness in the people selected for the layoff. This will have long-term impacts on morale.

Microsoft has a ton of cash, right? Wouldn't it be smart for them to, once the layoffs are over, incent people to perform in the "new culture"? Give their key people more $, more responsibility, etc.?

ttty• 12 years ago

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dschiptsov• 12 years ago

So, finally, reality reasserted itself, and despite millions spent for brainwashing, Windows is already belongs to the past, the very same way Nokia phones are..)

72deluxe18• 12 years ago

How many people do you know using Windows?

How many of your work colleagues use Windows at work?

Does it really "belong to the past"?

kaonashi3• 12 years ago

About 20% of the people I work with use Windows. None of them are developers.

sz4kerto5• 12 years ago

Stephen Elop's email on the same topic, but focused on ex-Nokians:

http://www.microsoft.com/en-us/news/press/2014/jul14/07-17an...

tl,dr;: - Nokia X is dead - other Devices departments are not affected/the effect is limited

Zigurd2• 12 years ago

This is a bit of a bad sign. It means Microsoft won't have their own AOSP-based product. Android apps and ecosystem elements will always be second priority, no matter what any management claims. This makes it less likely that "mobile first, cloud first" actually means something different from "devices and services." If Windows Phone fails to gain altitude, it will drag the rest of the strategy down with it.

kentlyons• 12 years ago

It isn't just that Nokia X is dead. This says they're killing of all of what use to be "Smart devices" - which is/was the feature phone division. So that includes the Asha series, etc.

sirkneeland4• 12 years ago

Mobile Phones was the feature phone division. Smart Devices was the smartphone division.

All an academic point since now they're just going to be "the phones division"

sirkneeland4• 12 years ago

And Elop burns another platform. I've lost count at this point.

This is the THIRD round of major layoffs Nokia has gone through since 2011. I feel bad for my former colleagues.

aikah2• 12 years ago

There was a previous thread on HN where some users were cheering for MS saying,it was just fat trimming or "actually that's good news".

I dont wish it to happen to anyone. Being laid off is never "good news".

ertdfgcb• 12 years ago

It's good news for Microsoft if that person was useless and slowing everything down.

farrel• 12 years ago

That's a lot of unemployed Fins.

kiiski• 12 years ago

Apparently about a thousand. http://www.helsinkitimes.fi/business/11224-microsoft-plans-c...

EGreg2• 12 years ago

This struck me: the layoffs are motivated by two outcomes, one of which is "work simplification".

Automation eliminates jobs, I've said this for a while.

hnnewguy• 12 years ago

Automation eliminates jobs

Automation moves jobs around, it doesn't eliminate them.

EGreg2• 12 years ago

For that to happen, at least as many jobs would be created every time something would be automated. Where is the proof?

sgibat• 12 years ago

Is this going to bloat the Software Engineer market? Do we know what percentage are developers?

bigdubs• 12 years ago

From reading the email, I looks like the majority (~12k) of the cuts are in the Nokia division, not sure how many of those are developers but I'd imagine not the majority.

pierreio2• 12 years ago

So MS Bought Nokia and ~30k employees for ~$7.2 billion last April.

3 months later, MS may now be firing ~half of the Nokia group. The executives who drove that catastrophic deal stay.

What a testament to how disastrous big M&A really is. Is there any large acquisition that succeeded in the last 10 years? I'd feel sorry if I was a Nokia guy there, they pulled out the best non-Apple phone hardware in the last years.

Probably also a good reminder for Blackberry - dont sell yourself and die trying, it actually can't get worse.

untog4• 12 years ago

Is there any large acquisition that succeeded in the last 10 years?

You might have the wrong criteria for acquisition success. I'm sure both Nokia and MS knew these layoffs would come before they agreed to the purchase.

roc3• 12 years ago

I'm sure Nokia itself knew these layoffs were likely-to-inevitable whether that deal happened or not.

pierreio2• 12 years ago

Did MS? Including the cost of the lay off ($1.6b says Recode), Nokia price was actually $8.8b. What was their business case that was so easily scrapped just months into the purchase?

It may be successful on a tax/accounting perspective since the purchase was made in € with cash that couldn't be brought to the US.

Yet this does look like a gigantic waste of assets. Warren Buffett says that a successful business is all about mindfully allocating its resources. This looks like the oppsite - no wonder that Nadella has a hard time explaining what happens in simple words.

bpyne• 12 years ago

Success is highly subjective. Perhaps you mean different?

smackfu4• 12 years ago

Depends on the viewpoint: When you acquire a company, are the employees assets or liabilities?

hyperliner6• 12 years ago

Who? The engineers? Clearly many of them would be liabilities as their product lost. Some visionaries are needed, some business people, some engineering leaders, some bright engineers, etc.

Unfortunately, some acquisitions are for talent, others for revenue, others for customers, others for technology, or a mix, and the talent here may be a mix bag.

sz4kerto5• 12 years ago

Is there any large acquisition that succeeded in the last 10 years?

Yes, many. Think of the Lenovo-IBM deal -- massive success. The Facebook-Whatsapp deal is 2.5x bigger than this acquisition, we'll see how that works out (financially). Google-Youtube is a big one that can be considered as a big success as well. Ebay-Paypal. FB-Instagram.

madengr• 12 years ago

Bigger in terms of inflated stock prices, but not by head count. Lenovo has taken the Thinkpad line down the toilet, not that IBM wouldn't have.

Thaxll• 12 years ago

Facebook-Whatsapp are you serious?

apalmer• 12 years ago

the Google-Youtube, FB-Instagram and FB-Whatsapp are clearly not in the same category of merger & aquisition as MS & Nokia.

walshemj3• 12 years ago

That wasn't a merger that was IBM dumping a low margin business unit.

These Uber mergers never seem to create any lasting value

chubot• 12 years ago

It does seem less likely for an acquisition of a large company to be successful than a small one.

The last three you mentioned are all tiny companies acquired for huge amounts of money.

YouTube had something like 60 people at acquisition -- definitely under 100. Instgram had under 20 I believe. Not sure about Paypal but I'm sure it was dwarfed by Ebay.

There is something to that. I think a smaller number of people can be integrated into a larger one, but when two massive companies like Microsoft and Nokia come together, there is bound to be friction.

Not sure what happened with Google and Motorola, but the companies were I think wisely kept separate, whereas it sounds like Nadella wants more "integration synergies".

higherpurpose• 12 years ago

Many of your examples are super-valued acquisitions, paid mostly with stock funny-money, and that employ a few hundred employees at best, which makes them irrelevant to the case here, where Microsoft got 30,000 employees from Nokia.

snowwrestler2• 12 years ago

Google bought DoubleClick in 2008 for $3 billion.

Yrlec• 12 years ago

Usually one of the main reasons you do M&A is that there are redundancies between the organizations. Therefore, being able to lay people off while maintaining the same output is one of the goals of the deal, not a sign of failure.

chris_mahan• 12 years ago

Ah, perhaps if you're the MBA bean counter type. In reality, you should grow the business, because now you have much better back-office capabilities to support a more distributed, more diverse workforce. Don't be afraid of having lots of people, be afraid of not managing (supporting) them well, causing inefficiency.

outside12345• 12 years ago

It can get worse. MS could be firing the whole team and not just 50%. This is the reality that Blackberry faces.

dragonwriter3• 12 years ago

Is there any large acquisition that succeeded in the last 10 years?

Lots. Of course, success is relative to for whom -- many of them work out well for shareholders of the acquired firm, many work out okay for shareholders of the acquiring firm, and the executives on both sides usually do well.

Of course, part of how it works out for those groups is that it, by design, doesn't work out well for the "human resources" that are production inputs.

incision3• 12 years ago

'So MS Bought Nokia and ~30k employees for ~$7.2 billion last April. 3 months later, MS may now be firing ~half of the Nokia group. The executives who drove that catastrophic deal stay.'

My understanding, primarily from friends at Cisco which has its own history of acquisitions and layoffs is that this is roughly standard procedure, catastrophe or not.

Basically, there's always going to be a lot of overlap when acquiring another large company. Loads of people are made completely redundant and things that didn't come out via diligence are discovered.

There's a wait and see period where some people leave, followed by jockeying for position and finally layoffs of people who remain redundant and/or lacked the awareness to pursue either of the former two options.

Obviously, a merger which doesn't pan out would amplify the effect.

What I wonder is how much such a process actually affects the success of these mergers? Do the consultants and banks who assist in these sort of things have a variable to account the back-biting scramble that will take place in each first year?

kyrra• 12 years ago

Cisco does buy a lot of companies, but only about as many as google has bought. Though Cisco has has more billion $ or higher deals.

http://en.wikipedia.org/wiki/List_of_acquisitions_by_Cisco_S...

http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...

sanxiyn• 12 years ago

By the way, survey of mergers found that while most mergers fail, Cisco is an outlier making successful mergers one after another. It is said that Cisco analyzed successful and unsuccessful mergers and does data-driven, evidence-based decision making.

http://www.overcomingbias.com/2010/03/hard-facts-mergers.htm...

pasbesoin• 12 years ago

Further, people within the controlling interest tend to prefer dealing with those they know.

Even if you are a high performer, being part of the now-controlled interest deals you something of the short stick, as they say.

If your company is acquired, be prepared to move on. Regardless of personal performance, they may give you no choice.

sirkneeland4• 12 years ago

While I am no fan of the deal (to say the least), Nokia would have had to make these deep cuts independently based on the continued inability of Windows Phone to sell enough to support a company of Nokia's size.

hyperliner6• 12 years ago

I think the best way to say the above is not that "Microsoft lays off half of Nokia group."

It should instead be "Microsoft saves half of Nokia's employees jobs."

mynegation• 12 years ago

The situation is almost reverse in smaller scale companies. It is not unusual for a mid-sized company to acquire another mid-sized or small company, keep the factory workers, engineering, R&D and lay off all mid and senior management (though with pretty good severance usually) to install their own people.

pistle• 12 years ago

Your logic and worldview are all inverted.

You buy ailing companies and then cut fat. That's the plan, not evidence of a bad decision.

What was happening to Nokia WITHOUT getting bought and gutted? They were in a tailspin and had major internal friction issues getting good tech to the top of the consumer heap. They would be another Blackberry...

Oh wait, you also suggest Blackberry fight it out with their wet noodle of a product line?

As an employee, when you are acquired, you either are indispensable (and will not be made redundant) or you should probably head for the door so you aren't competing with your coworkers for spots when a flood of you are dumped into the market.

Microsoft got the products, IP, licensing deals and will be keeping a block of very productive employees. This is an obvious move and good for MS, MS shareholders, and, indirectly, consumers.

bluedino• 12 years ago

> I'd feel sorry if I was a Nokia guy there, they pulled out the best non-Apple phone hardware in the last years.

They have almost no marketshare in the US. So is it really the best non-Apple hardware, or does being the best not really even matter?

ladzoppelin• 12 years ago

That could be changing and the US is not the only market that matters. There is a reason Google, Tinder and other companies deny perfectly working apps on the Windows ecosystem and its not because Windows phone is irrelevant.

ape4• 12 years ago

I hope the ex-Nokia people start a phone company.

k_a• 12 years ago

ehm... http://jolla.com

cwyers• 12 years ago

I think that "we can run this unprofitable business with half its current headcount, thus turning it into a profitable business" is hardly an indication of failure.

TheOtherHobbes3• 12 years ago

You're assuming the unprofitable business will become profitable.

Businesses are never unprofitable because they have too many employees.

Businesses are unprofitable when management lacks the skills, the foresight, or the vision to make those employees profitable.

Edit: If this isn't obvious consider what a world-class entrepreneur could do with 12,000 experienced employees, a couple of billion in severance savings, and a kick-ass idea.

clarky072• 12 years ago

You seem to not understand how mergers and acquisitions work. There are generally large redundancies which is part of the reason for the deal. Get rid of payroll while maintaining the same total output. Also, a major reason for buying Nokia had to be it's IP. I don't think this is any way a sign the deal failed, and I'm sure it was expected by all of the executives and most of the employees.

tomkarlo• 12 years ago

It doesn't make sense for a company that's trying to sell itself to also start making large cuts - it may drive your own price down by signaling that your businesses lack potential. The acquiring company will calculate in the cost (and savings) from the cuts ("synergies", to use the banking term) and just roll them into the purchase price.

So if you're the selling CEO / board, you get to claim you sold the company whole, and if you're the buyer, you just blame the cuts on the increased efficiencies to be gained from combining the companies - it's a sign that the deal is "successful" and you're achieving the synergies you modeled before the purchase.

badman_ting• 12 years ago

Very strange comment, I'm sure execs expected all of this when the deal was done. Their expected outcome probably does not look "catastrophic" to them.

Actually, I would say that by the time the deal rolled around the catastrophe had already played itself out at Nokia. It's sad what happened to Nokia, but the acquisition is the least of it.

snowwrestler2• 12 years ago

The whole point of M&A is too eliminate redundancies in the acquired company, so you can drive the same aggregate revenue with lower aggregate costs. Layoffs are not a sign of M&A failure, they are at least neutral, and might be a sign of success.

edit: clarifying language

kstop• 12 years ago

Yikes - "over the next 6 months" => MS will be a disaster area until 2015 as people bicker and fight for a position on top of the human life raft.

justinzollars• 12 years ago

Microsoft Metro inspired the new airbnb design.

discordance• 12 years ago

Some context Microsoft head count: 127k Apple head count: 80k Google head count: 50k Facebook head count: 7k

72deluxe18• 12 years ago

Facebook has seven thousand people working on one website? Admittedly a BIG website with many users, but still a staggering amount of people. (I joke only partially)

How much PHP do they need to write each?

bnejad• 12 years ago

They aren't all developers.

IBM• 12 years ago

Apple has 50,250 employees in the US but 26k of them are in retail. Apple is very small for its market cap.

https://www.apple.com/about/job-creation/

thinkling• 12 years ago

OTOH, Apple has how many indirect employees in China? 100,000+?

flurpitude• 12 years ago

"Last week in my email to you I synthesized our strategic direction as a productivity and platform company..."

Good old corporatespeak. Anaesthetize them with tedious bullshit so you never have to say "You're fired."

synergies• 12 years ago

CTRL+F synergies

thejdude• 12 years ago

Is that an Outlook Ctrl-F or a Find Ctrl-F?

sirkneeland4• 12 years ago

Attention Nokia (MS) workers: Nokia (Nokia) is hiring.

headgasket8• 12 years ago

Is it me or this guy is trying hard the SteveJobs look in that picture?

Simple solution to all of microsoft's woes: Drop the WINNT kernel and replace it by a unix based variant. Is there any value in keeping the kernel closed source ? Hasn't that fight been lost a long time ago?

Windows is going byzantine fast; there's no value in compilers and in os kernels anymore, the open source ones are better but MS still thinks that they have these as a competing advantage while they are a R&D money pit.

MrDosu3• 12 years ago

Implying the WINNT kernel doesn't have the best device driver support in the world by a huge margin...

headgasket8• 12 years ago

Thanks for pointing this out! But would you think think that in this post pc era, devices per se that require drivers and dont have their own os that can communicate via standards are kind of going the way of the dodo?

As an aside, I'm wondering why every time I try to post something on YC's news forum I seem get downvoted. Is it groupthink that I just cant join in on? Is this community averse to opinions or ideas that run against the current grain?

wes-exp2• 12 years ago

Is there any value in keeping the kernel closed source ?

It prevents forking. MS doesn't want to compete against its own kernel. Even Android doesn't want to compete against itself, hence the manufacturer agreement(s) that make it effectively closed.

headgasket8• 12 years ago

yes I agree, as a corporate entity this has value. But by being closer to the unix based variants they would be closer to everyone else to port cool things over and to use innovations via osmosis. Android is effectively a unix variant. OSX etc. They all benefit from the unix/linux/bsd ecosystem.

72deluxe18• 12 years ago

What's wrong with the NT kernel? How does its closed-source nature affect how useful it is? I note that the closed-source iOS kernel seems to also be quite effective, as does the Mach kernel for Mac OSX (despite the existence of and generally not very useful OpenDarwin availability). The history of NT is quite interesting, as is the NT article on Wikipedia.

And despite Mac OSX and iOS being BSD-based, my mum doesn't shout "I love my UNIX OS!" every time she uses her iPad - she doesn't care.

I don't think Microsoft's woes relate to their kernel. I doubt that you could argue that Linux's UNIX-style kernel is the single reason for its success in the server market; userland is what has made it massively useful. And although varied forms of Linux (read Android) have widespread use, the avalanche of Linux on the desktop hasn't happened (and likely won't!). Businesses still use PCs for their work, despite the occasional Mac you see. You don't see people using mobile devices for work (other than replying to emails whilst on the move), despite Satya's "mobile-first" new motto.

I would also argue that compilers are not going out of fashion or use and there is no value in them; do you REALLY believe that? How do you run any software on your device without a compiler to build the software in the first place? Given the exciting developments in compiled languages (C++11, C++14) recently (and half compiled ones like C#) I would argue that they are more relevant than ever, despite their obvious unpopularity with web developers who irritatingly eternally proclaim how irrelevant they are, and how out of date the languages they don't know are.

What makes MS' compilers bad, by the way?

I just thought I'd reply as your comment seemed a little ill-thought-out? It isn't meant nastily BTW, more of a conversation!

headgasket8• 12 years ago

Thanks for the reply! (I also assume you are not my downvoter:-)

I see the value of replacing the NT kernel by a bsd variant as this: you free ride on a lot of work done by other people. Us software heads have decided we wanted the hard core kernel and compiler engineering to be open source, circa 1990. We've won philosophically, albeit we've lost economically, as the 18000 layoffs and the death of SUN, and transformation of IBM into a services company, etc. The best compilers out there are open source. The best language innovations are open source.

I've nothing against C# and VS, which I consider a very good well documented and better alternative to Java (which is itself loosing ground to javascript in terms of a glue language), and a wonderful IDE respectively; but I wont pay for either, as I will not pay or lock myself in MSSQL when postgres is superior and free. Dont get me wrong, I love MS, I've written code on their tools since MS VC++ 5. (circa 1995)

Besides that time when they did not stick to the C++ standard with the STL (was it in VSC++6 or the first .net edition? that one was painful for a while) I've always respected their compilers -- bug free and fast, and producing fast code. It's just that there is not value in keeping that closed source anymore, it's a cost, when the alternatives are all copying each other easily because the underlying kernels are close cousins.

So in my view MS is basically keeping this huge maintenance burden on it's own, with a shrinking overall install base percentage based of computing devices (combination of tablets phones pcs etc)

hyperliner6• 12 years ago

In startups, you can be gone at any time.

In large company, you can be gone at any time.

So, the lesson here is: prepare to be gone, and be gone before you are gone.

72deluxe18• 12 years ago

Very wise advice! Keep projects bubbling on the side in case this eventuality hits! And live within your means.

JasonIpswitch• 12 years ago

Anyone care to bet that within 18 months some Microsoft C-level will be complaining about "lack of company loyalty" over something an employee has done?

VikingCoder• 12 years ago

It's a bad time to try to get a job. You'll be competing against all them ex-Microsoft folks.

dickinurass• 12 years ago

tl;dr - looks like a bunch of Internal corporate bullshit I don't care about

microsoft employes some brilliant people but maybe in the future they should actually think about what they products are trying to push on people so they stop fucking themselves over constantly?

solnyshok• 12 years ago

That's another milestone achieved in Elop's grand plan to bring MS and Nokia heads to the throne of Adobe.

woi133• 12 years ago

1. Any reason why executive pay can't be reduced and save these jobs ? Why pay stupid executive million and millions dollars and chop jobs of these poor people ?

2. Who determines who gets to stay and who gets to be fired ? Fucked up ranking system ? Ass-Lickers ?

3. Anyone saying layoff are good should really take second look outside during daytime ( 9 - 5). Once you are in battleground of searching job its hell. Really , its hell. People don't fucking respond even though you have many blazing things to show. You know why ? Because , you may not necessarily be good fit ? Your age , Your cool factor , being fucking social comes into play. If you are in 30s and have given up coding , good luck finding something in management.

4. If you are on H1-B , its grand fuck. You get 15 days to leave country or find new job. Overstaying is illegal and you seriously jeopardize green card , stamping process. Many companies ( mine being medium size ) have automated notification to DHS about H1-B status update, cancelling petition, visas.

edit : Can't believe so many shills here. Let the downvote brigade begin. Have a good life.

gfodor• 12 years ago

re: #1 point is less about cost cutting per se in a lot of cases and more about creating a more efficient and productive organization by firing people who are a drag on things. of course, this is microsoft we're talking about here, so ymmv.

woi133• 12 years ago

I understand your point. However, its not necessarily people who are drag will get fired. Many smarties , especially one who keep to themselves will be included as well.

I feel sorry for those who are being let go.

vlunkr• 12 years ago

It sucks that people have to lose their jobs, but Microsoft isn't a welfare program, they exist to make money, and that drives all of their decisions.

throwaway0010• 12 years ago

If the job is unnecessary why would it be a good idea to "save" it?

woi133• 12 years ago

i'm not at Microsoft. But, think from prospective that someone could be having life event. Some put years worth of efforts that including physical, mental energy into MS ( or previous Nokia ) , planned something and now potential job loss could be trigger to disaster.

kanwisher• 12 years ago

It seems like if you didn't have a green account, you would have been down voted. Seems like an overly angry un HN post

jjindev2• 12 years ago

You know, companies with the size and wealth of MS sometimes employ people just to have them NOT innovating elsewhere. Consider 18K smart people freed of that as the bright side.

LunaSea• 12 years ago

"bright"

jjindev2• 12 years ago

https://www.youtube.com/watch?v=SJUhlRoBL8M

pliptvo3• 12 years ago

I find it fascinating that there's not a single comment here regarding industrial action.

18,000 people will have their jobs slashed just like that without any resistance?

Instead they're just meant to leave with a smile on their face knowing that it's in the supposed benefit of their former employer?

I'm sure Nadella finds the decision to send 18,000 people to the job market much more 'difficult' than they'll find it out there.

sgedljsgejkl• 12 years ago

Do you even know what the definition of at will employment is?

amputect• 12 years ago

If we're being bitchy over definitions, then do you even know what the definition of "industrial action" is? Because it's orthogonal to whether or not the firings were legal: http://en.wikipedia.org/wiki/Industrial_action

pliptvo3• 12 years ago

"On the one hand, the doctrine of at-will employment has been heavily criticized for its severe harshness upon employees.[39] It has also been criticized as predicated upon flawed assumptions about the inherent distribution of power and information in the employee-employer relationship.[40] On the other hand, conservative scholars in the field of law and economics such as Professors Richard A. Epstein[41] and Richard Posner[42] credit employment at will as a major factor underlying the strength of the U.S. economy. Source: https://en.wikipedia.org/wiki/At-will_employment#Controversy

Well I'm certainly not a conservative.

I think the second point is true. An at-will contract (or lack thereof) is essentially skewed towards the free will of the employer in a way that is massively to the detriment, as these cuts prove, to that of the employee.

At will might be the employment norm in America, but assuming a sizeable number of Nokia's workers are actually Finnish where they have far stronger employment laws, I would wonder whether this is all even legal.

DVassallo• 12 years ago

WA is an "at will" state. Businesses may fire "at will." There are no laws regarding dismissal, so businesses are not required to give warnings or follow any particular steps.

Source: http://www.lni.wa.gov/WorkplaceRights/ComplainDiscrim/Termin...

dragonwriter3• 12 years ago

That all seems to be a non-sequitur, since industrial action does not require that the event it is in response to is illegal (indeed, industrial action has frequently been directed against employers whose actions are not merely legal but strongly backed by government and supported with government force.)

kitwalker12• 12 years ago

they're also doing internal restructuring. a friend who works there tells me they are doing away with the QA department and instead relying on unit tests & developers to do the feature testing themselves. IMHO that's a good move. QA departments in MS have moved to a position where every developer hands them the dll to even test that it works at all.

Scuds2• 12 years ago

This whole thing is a world apart from the kids living six to a room in hacker hostels churning out MVVM frameworks for Erlang.

Microsoft Looks to Cut Up to 18,000 Jobs

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