Microsoft is paying dearly for Ballmer’s final huge mistake

Microsoft Nokia Layoffs Ballmer

One big takeaway from Thursday’s terrible news that Microsoft is laying off 18,000 employees is that the company now sees former CEO Steve Ballmer’s decision to buy Nokia as a Gob Bluth-style huge mistake. 12,500 of the affected employees came from the Nokia devices and services division, which amounts to around half of the roughly 25,000 employees that Microsoft absorbed when it officially acquired Nokia earlier this year.

Barron’s flags some research notes that similarly say that Microsoft CEO Nadella’s decision to lay off so many Nokia employees is really his way of cleaning up Ballmer’s “mess.”

“We believe [the 18,000 layoffs were] about double what the Street was expecting, and while the cuts will be painful for employees, 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,” writes FBR & Co. analyst Daniel Ives. “Under the Ballmer era there were many layers of management and a plethora of expensive initiatives being funded that has thus hurt the strategic and financial position the company is in, especially in light of digesting the Nokia acquisition.”

These layoffs aren’t just costing Microsoft personnel either — they’re costing money in the form of severance packages and other costs that Microsoft estimates will result in a charge of between $1.1 billion and $1.6 billion over the next year.

Ballmer’s decision to buy Nokia in the first place was reportedly very controversial within the company. Bloomberg Businessweek reported earlier this year that Ballmer was heard screaming at the company’s board of directors back in 2013 because they were reluctant to sign off on his proposed deal.

Source:
Barron's
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