By this time next year, Microsoft will have cut another 2,850 employees. The layoffs were revealed by Microsoft's 10-K filing yesterday and started at the beginning of this month.
The SEC filed 10-K report notes,“in addition to the elimination of 1,850 positions that were announced in May 2016, approximately 2,850 roles globally will be reduced during the year.” The layoffs will focus mostly on the phone division as the company continues its restructure.
Microsoft emphasizes that despite the cutbacks, it has employed almost 114,000 people on a full-time basis since June. 63,000 of these were in the US, and 51,000 internationally.
Of the 2,850 employees laid off, 900 have been notified, leaving 1,950 who have yet to receive the news. Though mostly in the phone division, the 10-K report also mentions losses in the global sales department.
Admittedly, the removal of almost three thousand employees doesn't look great for the company. It does, however, make a lot of sense. It's no secret that the company's phone business has not been doing well recently.
Windows Phone sales account for just three percent of market share globally. In May Microsoft scaled back it's Lumia operations, and before then, they sold their Nokia feature phones to Foxconn and HMD Global.
The offload of the feature phone division resulted in 4,500 employees moving to the buyer's firms. Microsoft has clearly been trying to distance themselves from their Lumia business for some time, so the extra cuts should come as no surprise.
The 10-K report also revealed the company's phone sales for the entire fiscal year:
“Phone revenue decreased $4.2 billion or 56%. We sold 13.8 million Microsoft Lumia (“Lumia”) phones and 75.5 million other phones in fiscal year 2016, compared with 36.8 million and 126.8 million sold, respectively, in fiscal year 2015.”
When you look at the statistics, it's easy to see why Microsoft has been so active in its cutbacks. Though employees being laid off is never pleasant, it's hard to deny that the move makes sense. Hopefully, the re-structure will benefit the company and it's consumers in the long-term.