The job-cut plans, which were announced by Nadella and Microsoft Executive Vice President Stephen Elop, included 12,500 jobs involved with Microsoft’s MSFT +1.96% $7.2 billion acquisition of Nokia’s devices and services business, which was completed in April. Microsoft plans for the job cuts to be completed by June 2015.
Nadella hinted that changes were in the works in a lengthy e-mail to Microsoft employees on July 10. On Thursday, he expanded on his views saying, “Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life.”
Those ambitions seem to be heavily centered around Microsoft’s Windows Phone products. Elop, who re-joined Microsoft after a stint as Nokia’s CEO, made no secret of Microsoft’s plans in a note he sent to company employees.
“We will be particularly focused on making the market for Windows Phone,” Elop said, adding that Microsoft’s near-term plans include building up Windows Phone volumes by focusing on the Lumia device and the “more affordable smartphone segments.”
With Microsoft trying to gain more of a foothold in a market dominated by Apple Inc’s.AAPL -1.05% iPhone and Android-based devices like those from Samsung, Microsoft has its work cut out for it. Mark Moerdler, an analyst with Bernstein Research, said that it appears that what Microsoft wants to do is streamline its Nokia business into something that innovates more for Microsoft products rather than a traditional phone business. Moerdler said that this strategy would be akin to that of one of the company’s rivals.
“This is more similar to Google’s current Nexus approach than the Apple integrated hardware and software model and probably differs from [former CEO Steve] Ballmer’s previous vision,” Moerdler said.
That vision of Ballmer didn’t get high marks from analyst Daniel Ives, of FBR Capital Markets.
“The cuts will be painful for employees,” Ives said. “[But] they were necessary, in our view, and speak to Nadella’s attempt at cleaning up part of the mess that Ballmer left behind in Redmond.”
Investors’ reaction to Microsoft’s job-cut plans was positive, as the company’s stock price rose more than 3%, to reach $45.71 a share, a level not seen since 2014.
Among other bellwether tech companies, eBay Inc. EBAY +2.08% shares rose 2% to $51.70 following the company’s second-quarter results late Wednesday.
