Microsoft Slashing Jobs: Decision 'Difficult, but Necessary'

Shibani Joshi of Yahoo Finance reports on the largest layoff ever from a company.
5:45 | 07/17/14

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Transcript for Microsoft Slashing Jobs: Decision 'Difficult, but Necessary'
Okay. It is Thursday July 17 the markets -- New York are open at today's big number 18,000. And it's not a good thing if you were from Microsoft that company making a big announcement today that -- this restructuring with the newly acquired Nokia. It will be eliminating 18,000 jobs over the next year. When I'm down Cutler in New York -- hear the details on the big announcement and what it means from Microsoft those workers potentially consumers as well -- finances Shibani Joshi. About a thanks for joining us they appreciate it had -- -- so this is a big announcement did anyone see this coming. Well I mean -- I think that's the short answer of its and we knew that Lilly -- coming from Microsoft a sad that they would when they did buying Nokia had not that long ago they said that they would mean making stem workforce reductions and that normally happens it in the normal course of business when -- one company buys another company get rid. Some overlapping. Positions -- and and people in the work force but this number 18,000 is quite stack staggering it is something that I don't think anybody expected. And then basically the companies trying to remove a lot of redundancies in the organization. Within the Nokia division that it just purchased. But also would then Microsoft as it tries to turn a new page with the new CEO. And really revamp itself in this as a first step in doing so well -- that. Agent and speaking out pages we read some of this memo that was sent out the employees this morning essentially these job cuts -- -- -- -- to realign the workforce. But what else -- this -- saying. -- -- -- -- -- This is it you know by the way I read it Dan is it's an internal -- -- it is just -- called action that second a gallon in new CEO who came into it came in action came in a play in February. Is trying to rally his troops yes it's kind of demoralizing. For employees to hear about this news -- -- -- they worry about their own security but sometimes. When you have a new CEO when you have these integrations is as the first -- and seeing a new and bring new face of a company. And that's what he's trying to bring in he's trying to rally -- streamline the company he's trying to get the company to focus on new areas. Microsoft has been a traditionally a software company. Focused on the PC business and we know away if apple and and tablets and everything that has come -- -- play. That that's not the wave of the future so what the company wants to focus on now -- things on mobile devices that's why thought Nokia. Also in the cloud and it's happening to do that from the ground happened that's what he basically put into the memo. -- called action last flatter organization. Moving faster more -- -- And that's not something that we really associate Microsoft -- in this environment. Right exactly well given the fact that it is -- try to expand. Its holdings and it and it's its applications -- do we know anything specific about where these cuts might be coming from which departments which divisions. That morning majority of them if I remember correctly I think like 12,000 of them and so you know good that the three quarters of the job cuts are going to be coming within -- within nine Nokia -- -- so you've got one accounting person and Nokia wanna -- and in person and Microsoft used streamlined lending get income -- amend a one job and you get rid of the other so it's it's sort of that. I'm some of them are also going to be coming would then -- in the Microsoft organization again it's trying to shift its focus so it's gonna get out of certain businesses. And move towards a cloud moved towards mobile. It cuts shots but then it starts a higher again in these new arena so this is not sort of the end in terms of job prospects at the company that's sort of the that -- the bright side of this story. It cuts I am at -- cuts out -- it doesn't need and then it starts or reposition and then they will begin hiring again you can only imagine. In short order in the areas that it wants to grow and develop -- that. -- -- -- I -- 18,000 -- of this size does not happen very often when was the last major announcement like this that happened it was. -- it was back in 2009. Actually with the New York Times I was the largest sort of magnitude one that we've seen -- 5900, with 5600 employees cut. Usually when companies cut -- cut a hundred employees a few hundred employees -- thousands but tens of thousands is something we don't see all that often. And adjectives -- and I I think also a sense of this type of work that Microsoft needs to do if you think they you can like go have that many people. That means your organization might have not been fully functioning fully -- -- working at sort of top efficiency. It is trying to get in there and compete and be. Similar to it to Google and apple and to try and compete on many different levels and -- -- misses that. That this is the hard work that it needs to do ahead of that and investors like it at you know at the market -- shares are up about 3%. Investors lake Whitney streamlining -- cut costs -- get leaner and meaner because eventually. It will take you into a better place. Right leader -- meter in last April as you go do we -- have any idea about what it's gonna cost though and severance and payouts for those layoffs. Yeah it's in the hundreds of millions I don't have that figure after the top of my head but this is a great typically -- you'll have to pay out -- severance and all those things. I I I think I remember I figure something around 400 million but -- I don't -- and stick to that figure but that becomes a one -- costs and then after that the company moves on. Shibani Joshi from Yahoo! finance -- thanks so much have a good Thursday great things. Of course you can keep the latest headlines right here on abcnews.com. You -- much in the big number. -- -- -- -- --

This transcript has been automatically generated and may not be 100% accurate.

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