By Rex Crum, MarketWatch
SAN FRANCISCO (MarketWatch) -- Microsoft Corp. stole the
tech-sector spotlight Thursday as Chief Executive Satya Nadella
expanded on his new vision for the company by announcing 18,000 job
cuts and plans to double-down on the company's Windows Phone
efforts.
The job-cut plans, which were announced by Nadella and Microsoft
Executive Vice President Stephen Elop, included 12,500 jobs
involved with Microsoft's (MSFT) $7.2 billion acquisition of
Nokia's devices and services business, which was completed in
April. Microsoft plans for the job cuts to be completed by June
2015.
Nadella hinted that changes were in the works in a lengthy
e-mail to Microsoft employees on July 10. On Thursday, he expanded
on his views saying, "Having a clear focus is the start of the
journey, not the end. The more difficult steps are creating the
organization and culture to bring our ambitions to life."
Those ambitions seem to be heavily centered around Microsoft's
Windows Phone products. Elop, who re-joined Microsoft after a stint
as Nokia's CEO, made no secret of Microsoft's plans in a note he
sent to company employees.
"We will be particularly focused on making the market for
Windows Phone," Elop said, adding that Microsoft's near-term plans
include building up Windows Phone volumes by focusing on the Lumia
device and the "more affordable smartphone segments."
With Microsoft trying to gain more of a foothold in a market
dominated by Apple Inc's. (AAPL) iPhone and Android-based devices
like those from Samsung, Microsoft has its work cut out for it.
Mark Moerdler, an analyst with Bernstein Research, said that it
appears that what Microsoft wants to do is streamline its Nokia
business into something that innovates more for Microsoft products
rather than a traditional phone business. Moerdler said that this
strategy would be akin to that of one of the company's rivals.
"This is more similar to Google's current Nexus approach than
the Apple integrated hardware and software model and probably
differs from [former CEO Steve] Ballmer's previous vision,"
Moerdler said.
That vision of Ballmer didn't get high marks from analyst Daniel
Ives, of FBR Capital Markets.
"The cuts will be painful for employees," Ives said. "[But] they
were necessary, in our view, and speak to Nadella's attempt at
cleaning up part of the mess that Ballmer left behind in
Redmond."
Investors' reaction to Microsoft's job-cut plans was positive,
as the company's stock price rose more than 3%, to reach $45.71 a
share, a level not seen since 2014.
Among other bellwether tech companies, eBay Inc. (EBAY) shares
rose 2% to $51.70 following the company's second-quarter results
late Wednesday.
Google Inc. (GOOGL) was down by almost $5 a share at $585.75 and
IBM Corp. (IBM) rose almost 2% to $195.82. Both companies are
slated to report quarterly results after Thursday's market
close.
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