Microsoft Corporation (NASDAQ:MSFT)’s Begins What Maybe be Massive Lay-Offs
Microsoft Corporation (NASDAQ:MSFT) announced job cuts of 7,800 position and most of them will happen in Finland, where there are more former employees of Nokia. The announcement came few days ahead of the financial results disclosure. It will not be a surprise if the company opts for more lay-offs as it is in the process of reorganizing itself. Will it affect the performance of its Finland unit?
Hit Hard
It was not a surprise to investors or analysts on Microsoft Corporation (NASDAQ:MSFT)’s move to axe jobs in the handset making facility since that is not producing the expected results. Currently, the company is making its Microsoft Lumia from its Finland facility only. Therefore, there is a concern that sales and marketing teams will get hit in Finland since the job elimination will happen in both the divisions.
The unit has already been hit very hard. About 12,500 positions were eliminated from Finland in the last big job cuts of 18,000. Still about 3,200 people are working in Finland. There is a fear that about 2,300 jobs will cut in Finland facility since the software firm is shutting down its operations in Salo city. That was because the company is shifting its facilities to Tampere and Espoo.
Reorganizing
Microsoft Corporation (NASDAQ:MSFT) is reorganizing itself after handing over the display ad operations to AOL, Inc. (NYSE:AOL). Similarly, the sales team is moving to the Consumer Channels Group from Mobile Device Sales headed by Jude Buckley. Chris Weber would continue to head the MDS team but will report to Buckley.
The company’s move is quite understandable since it was not able to break the jinx in the smartphone segment. The company has not been able to gain much from the acquisition of Nokia. Microsoft Corporation (NASDAQ:MSFT) might have felt that it is better to focus where it has strength rather than keep probing deep into areas where there are a number of small players. Additionally, smartphone growth will happen in the emerging markets where pricing matters.
Microsoft Corporation incorporated on September 22, 1993, is engaged in developing, licensing and supporting a range of software products and services. The Company also designs and sells hardware, and delivers online advertising to the customers. The Company operates in five segments: Devices and Consumer (“D&C”) Licensing, D&C Hardware, D&C Other, Commercial Licensing, and Commercial Other. The Company’s products include operating systems for computing devices, servers, phones, and other intelligent devices; server applications for distributed computing environments; productivity applications; business solution applications; desktop and server management tools; software development tools; video games; and online advertising. It also offers cloud-based solutions that provide customers with software, services, and content over the Internet by way of shared computing resources located in centralized data centers. It also designs and sells hardware, including PCs, tablets, gaming and entertainment consoles, phones, other intelligent devices, and related accessories. Cloud revenue is earned primarily from usage fees and advertising. Its cloud-based computing services include Bing, Microsoft Azure, Microsoft Dynamics CRM Online, Microsoft Office 365, OneDrive, Skype, Xbox Live, and Yammer. In addition to selling individual products and services, the Company offers suites of products and services. It provides consulting and product and solution support services, and trains and certifies computer system integrators and developers. The Company does business worldwide and has offices in more than 100 countries.
Devices & Consumer
The Company’s D&C segments develop, manufacture, market, and support products and services designed to increase personal productivity, help people simplify tasks and make more informed decisions online, entertain and connect people, and help advertisers connect with audiences. The Company’s D&C segments are made up of D&C Licensing, Computing and Gaming Hardware, Phone Hardware, and D&C Other. D&C Licensing: The principal products and services provided by the D&C Licensing segment are Windows, including original equipment manufacturer (OEM) licensing (Windows OEM) and other non-volume licensing and academic volume licensing of the Windows operating system and related software; non-volume licensing of Microsoft Office, comprising the core Office product set, for consumers (Office Consumer); Windows Phone operating system, including related patent licensing; and certain other patent licensing revenue. The Windows operating system is designed to empower individuals, companies, and organizations to simplify everyday tasks through operations across the user’s hardware and software. The versions of Office included in the Company’s D&C Licensing segment are designed to increase personal productivity through a range of programs, services, and software solutions. Growth depends on its ability to add value to the core product set and to continue to expand the Company’s product offerings in other areas, such as content management and collaboration. Office Consumer revenue is impacted by sales to customers that buy Office with their new devices and by product launches, as well as the transition to Office 365 Consumer, its subscription-based cloud service that provides access to Office plus other productivity services. Office 365 Consumer revenue is included in the Company’s D&C Other segment. The Windows Phone operating system is designed to bring users closer to the people, applications, and content they need. Windows Phone revenue associated with this contractual relationship is reflected in D&C Licensing. Windows Phone revenue also includes revenue from licensing mobile-related patents. The Company competes with Apple and Google. Windows Phone operating system faces competition from iOS, Android, and Blackberry operating systems. Computing and Gaming Hardware: The principal products and services provided by the Computing and Gaming Hardware segment are Xbox gaming and entertainment consoles and accessories, second-party and third-party video game royalties, and Xbox Live subscriptions (Xbox Platform); Surface devices and accessories; and Microsoft PC accessories. The Xbox Platform is designed to provide various entertainment choices through the use of the Company’s devices, peripherals, content, and online services. The Company offers Xbox 360 and Xbox One. Surface devices are designed to help organizations, students, and consumers to be productive, offering accessories and compatibility with peripherals. The Company’s new Surface device, the Surface Pro 3, was released in June 2014. The Company’s Xbox Platform competes with console platforms from Sony and Nintendo. Phone Hardware: The principal products and services provided by the new Phone Hardware segment are Lumia Smartphones and other non-Lumia phones, which the Company began manufacturing and selling with the acquisition of Nokia Corporation’s Devices and Services Business in April 2014. The Company’s phones face competition primarily from Samsung and Apple. D&C Other: The principal products and services provided by the D&C Other segment are Resale, including the Windows Store, Xbox Live transactions, and the Windows Phone Store; search advertising; display advertising; Office 365 Consumer, comprising Office 365 Home and Office 365 Personal; Studios, comprising first-party video games; and the Company’s retail stores. Windows Store and Windows Phone Store are online application marketplaces that are designed to benefit the Company’s developers and partner ecosystems by providing access to a customer base and benefit users by providing centralized access to certified applications. Xbox Live transactions consist of online entertainment content, such as games, music, movies, and TV shows, accessible on Xbox consoles and other devices. Search and display advertising includes Bing, Bing Ads, MSN, Windows Services, and Xbox ads. The Company is the algorithmic and paid search platform for Yahoo! Websites worldwide. It has completed the Yahoo! worldwide algorithmic transition and the paid search transition in the U.S. and planned international markets. Office 365 Consumer is designed to increase personal productivity through a range of Microsoft Office programs and services delivered across multiple platforms through the cloud. Studios designs and markets games for Xbox consoles, Windows-enabled devices, and online. The Company faces competition from Amazon, Apple, Google, Facebook, Yahoo, Electronic Arts and Activision Blizzard.
Commercial
The Company’s Commercial segments develop, market, and support software and services designed to increase individual, team, and organization productivity and efficiency, and to simplify everyday tasks through operations across the user’s hardware and software. Commercial is made up of the Commercial Licensing and Commercial Other segments. Commercial Licensing: The principal products and services provided by the Commercial Licensing segment are server products, including Windows Server, Microsoft SQL Server, Visual Studio, System Center, and related Client Access Licenses (CAL); Windows Embedded; volume licensing of the Windows operating system, excluding academic (Windows Commercial); Microsoft Office for business, including Office, Exchange, SharePoint, Lync, and related CAL (Office Commercial); Skype; and Microsoft Dynamics business solutions, excluding Dynamics CRM Online. The Company’s server products are designed to make information technology professionals and developers and their systems productive. Server software is integrated server infrastructure and middleware designed to support software applications built on the Windows Server operating system. This includes the server platform, database, business intelligence, storage, management and operations, virtualization, service-oriented architecture platform, security, and identity software. The Company also licenses software development lifecycle tools for software architects, developers, testers, and project managers. CAL provides access rights to certain server and Office products, including Windows Server, Microsoft SQL Server, Exchange, SharePoint, and Lync. Windows Embedded extends the power of Windows and the cloud to intelligent systems, including the Internet of Things, by delivering specialized operating systems, tools, and services. Windows Commercial revenue is primarily affected by the demand from commercial customers for volume licensing and software assurance. The versions of Office in Commercial Licensing are designed to increase personal, team and organizational productivity through a range of programs, services, and software solutions. Office Commercial revenue is primarily affected by a combination of the demand from commercial customers for volume licensing and software assurance and various information workers in a licensed enterprise. Skype is designed to connect friends, family, clients, and colleagues through various devices. Revenue is primarily driven by the sale of minutes, subscriptions, and advertising. Microsoft Dynamics products provide business solutions for financial management, customer relationship management, supply chain management, and analytics applications for small and mid-size businesses, large organizations, and divisions of global enterprises. Revenue is primarily driven by the number of information workers licensed. The Company competes in this segment with IBM, Oracle, CA Technologies, Apache, Linux, MySQL, PHP, Geronimo, Wildfly, Spring Framework, BMC, Hewlett-Packard, IBM, VMware, SAP, Ruby on Rails, Adobe Systems, Apple, Cisco Systems, Google, Infor, The Sage Group, NetSuite and Salesforce.com. Commercial Other: The principal products and services provided by the Commercial Other segment are Enterprise Services, including Premier product support services and Microsoft Consulting Services; Commercial Cloud, comprising Office 365 Commercial, other Microsoft Office online offerings, Dynamics CRM Online, and Microsoft Azure. Enterprise Services, including Premier product support services and Microsoft Consulting Services assist customers in developing, deploying, and managing Microsoft server and desktop solutions, and provide training and certification to developers and information technology professionals on various Microsoft products. Office 365 Commercial is an online services offering that includes Microsoft Office, Exchange, SharePoint, and Lync, and is available across various devices and platforms. Dynamics CRM Online is designed to provide customer relationship management and supply chain management for small and mid-size businesses, large organizations, and divisions of global enterprises. Revenue is primarily driven by the number of information workers licensed. Microsoft Azure is a scalable operating system with computing, storage, database, and management, along with cloud solutions, from which customers could build, deploy, and manage enterprise workloads and Web applications. These services also include a platform that helps developers build and connect applications and services in the cloud. The Company competes with Amazon, Google, IBM, Oracle, Salesforce.com and VMware.
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