Microsoft stock jumped a couple of percentage points (some of that reflected in our stock listing this week) after the formal announcement of what had been teased for some weeks: Employee cuts, massive cuts, not just the largest round of cuts in the company's history but more than three times as large as any before. In the Puget Sound alone, 1,351 jobs will be going away, though that's less than a tenth of the overall. More than one out of eight Microsoft employees will lose their jobs.
A lot of them, it is true, will come from Nokia, the comm device company it recent absorbed. Even so, a lot of MS jobs will be gone.
Financial analysts were quick to call it good. The Motley fool said the corporation “trims some fat.” Others said it was a sign that the company is becoming leaner, more agile, likely to move in different directions and leave behind some non-productive older ones. And on top of that, it shows the new CEO Satya Nadella is taking charge. Really. (Heck of a way to demonstrate that you're really, truly, the big cheese.)
A number of analysts argued that the Puget Sounds could gain, by bringing so many talented people on the market, freed up to create new businesses of their own. Although: Doesn't that seem to run counter to the fat-trimming narrative?
We've seen this kind of argument and reaction in any number of businesses over the years. It's not that these arguments are totally illegitimate; Microsoft has gone steadily over the years, with few cutbacks or layoffs, and that can be a recipe for building in some deadwood over time.
But 14% of the company's employees? At a time when the company was reporting strong profits?
Nadella surely did want to make a dramatic statement, and he succeeded in that. But cuts of that size tend to more meataxe than surgical in character, and the company is likely to lose a good deal of key talent. As for the Puget Sound, there'll be recovery and many of the ousted employees doubtless will move on to new areas of productivity; but in the short term at least this isn't good news for the area, and the longer term is speculative.
As, on reflection, may be Microsoft's.