14 DAY TRIAL // Microsoft completed the $7.2 billion Nokia takeover earlier this year and although everything seems to be just milk and honey for the two companies, sources from within the company indicate that Redmond might soon turn to drastic measures to reduce expenses due to the growing workforce.
The software giant already had some 100,000 employees across the world before taking over Nokia’s mobile phones unit, and once the deal was completed, it added another 25,000 that are specifically focused on the mobile efforts.
While the company is currently reorganizing its departments to fill available positions with employees coming from Nokia, a report published by GigaOM and citing people familiar with the matter say that cost and job cuts are a thing that cannot be avoided in the coming months.
Back in April when Microsoft confirmed the completion of Nokia’s takeover, the company hasn’t said anything about potential layoffs, explaining that it “welcomes” all Nokia employees as they join the software giant as part of this big transition.
“Microsoft welcomes personnel with deep industry experience in more than 130 sites across 50 countries worldwide, including several factories that design, develop, manufacture, market and sell a broad portfolio of innovative smart devices, mobile phones and services. As part of the transaction, Microsoft will honor all existing Nokia customer warranties for existing devices, beginning April 25, 2014,” it said at that time.
Microsoft’s CEO Satya Nadella also offered a reassuring speech, saying that together with the existing workforce, the company is set to deliver many innovations in the coming years.
“Today we welcome the Nokia Devices and Services business to our family. The mobile capabilities and assets they bring will advance our transformation,” said Microsoft CEO Satya Nadella. “Together with our partners, we remain focused on delivering innovation more rapidly in our mobile-first, cloud-first world.”
Microsoft hasn’t yet discussed a cost-cutting scenario, but the company clearly needs to rethink its strategy, as it’s already pouring money in projects that at the end of the day do not seem to be worth it. The Surface lineup, for example, is yet to become profitable, while both Office and Windows are bringing in less cash than in the year before.
Windows 8 is one of the most criticized Windows version ever released by Microsoft, while Office, which remains the company’s number one cash cow, will only soon expand to more platforms in order to capitalize on its undisputed popularity in the productivity software business.