Employee cull could be on the cards as Microsoft feels the pinchWritten by Mark Wilson on June 30, 2014 - 03:36PM @MarkWilsonWords
Insiders at Microsoft are warning that finances after the Nokia acquisition could see the company going on a diet. At the end of the fiscal year, it's time to look back at the income and expenditure over the past year, and there are a couple of things that are glaringly obvious. Snagging Nokia may have been a sensible move, but it was also an expensive one, adding $7.2 billion to the expense account.
Talking to GigaOM, a company insider said: "Ballmer buys Nokia and adds 25,000 people and a business that makes no money, so do the math." That level of staffing increase has obviously had a huge impact on expenditure, but there is also income to take into account.
Windows 8.x has not been the big-seller everyone was hoping, and this has restrict the flow of money into Microsoft's coffers. With neither Office nor Windows bringing in as much as they used to, other sources of income are more important than ever. Factor in the price war with Google that has forced Microsoft hand on Office and cloud storage pricing, and there are also losses that are expected to stem from the Nokia side of the operation. Things are starting to look serious.
The anonymous insider suggests that we could see job cuts affect as much as 10 percent of the workforce. It is being suggested that IT and marketing could be the hardest hit, but it is not yet clear when any announcements may be made.
It is possible that income from Surface Pro 3 -- which has managed to generate a good deal of interest -- as well as from Xbox One, will help to improve the financial picture for this time next year, but this will be of little comfort to anyone in a position deemed dispensable.
It will be interesting to see what happens over the next couple of months. Summer is something of a quiet time in the world of tech, and it would be a shame to see this period used to implement a company shakeup that leads to job losses. Time will tell.