“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,” Nadella wrote. “It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas.”
The announcement promises a “more lean and efficient” Microsoft. “We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making,” Nadella said.
To cover the dismissal costs, which represent more than 14 percent of Microsoft’s 127,000-person workforce, the biggest in the company’s history, topping the 5,800 jobs lost in fiscal 2009, the Redmond, Wa.-based firm expects to incur pretax charges of up to $1.6 billion over the next four quarters, which includes $750 million to $800 million for severance and related benefit costs.
“Making these decisions to change are difficult, but necessary,” Nadella wrote in an email posted on the software giant’s website.
The announcement appears to be moving Microsoft shares to the bullish side this morning, leading to a pre-market rally of nearly 4 percent to $45.72 and a new 14-year high.