) is reportedly planning to shed 5000 jobs, as it intends to build
leaner business processes and integrate Nokia Oyj´s handset unit.
Microsoft is expected to soon announce the elimination of jobs,
which is apparently the largest since 2009 when it had slashed 5800
Microsoft intends to lay off employees, primarily from it sales and
manufacturing teams, including its Nokia handset unit and global
Xbox team. In April, Microsoft closed the acquisition of Nokia's
Devices & Services Business, now named Microsoft Mobile Oyj for
When Microsoft announced its agreement to purchase Nokia last
September, it promised to generate annual cost savings of $600
million within 18 months after the closure of the deal. Therefore,
it seems that the job cuts in areas where the two companies overlap
are a part of the plan to live up to its commitment.
At present, Microsoft has nearly 127,000 employees worldwide, which
is far more than its competitors
). In 2009, Microsoft undertook a major restructuring action by
eliminating 5% of its workforce during the recession period in
2009. In the recent years, Microsoft has made small job cuts,
including the elimination of a few hundred employees in 2012 from
the marketing and advertising teams.
Research firm IDC anticipates PC shipments of 293.6 million units
in 2014. In fact, the decline in the PC industry is expected to
continue, declining to 287.3 million in 2018. The continuous
decline in PC shipments raises a question about the growth of the
PC industry. The decline has badly hurt the business prospects of
) that rely substantially on the sale of PCs. In fact, in May,
Hewlett-Packard Co. announced 16000 more cuts on top of 34,000
eliminated already, after witnessing declines in PC sales for the
11th consecutive quarter.
Microsoft is the latest technology business to downsize. Trimming
its workforce as part of its internal restructuring will help
Microsoft combat losses due to the fall in worldwide PC sales,
which have been declining as a result of the rising demand for
smartphones and tablets among consumers and corporates.
Furthermore, it will help to lower its operating expenses and
concentrate more on emerging areas like mobile, wearables,
cloud-computing and productivity software.
carry a Zacks Rank #3 (Hold).
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