Microsoft Announces 18,000 Layoffs- Stealing the Limelight from All the Other Tech Stocks

On Thursday, Microsoft Corp. (NASDAQ:MSFT) stole the limelight from tech sector when Satya Nadella, the Chief Executive Officer of the company, announced almost 18,000 job cuts and emphasized on the point that the company needed to double the efforts for its Windows Phone.

This job slash included almost 12,500 jobs that were linked to Microsoft Corp. (NASDAQ:MSFT)’s acquisition of Nokia services and devices. This $7.2 million worth acquisition deal completed in April, and now in July, the company has laid off 12,500 workers linked to that acquisition deal. The company plans to complete the layoffs by the end of June 2015.

Satya Nadella said that the employees were aware of these changes as the company sent an e-mail on July 10 to its employees. He further stated that the company has a clear focus as to what it aims at and what it needs to do to achieve its target, and that focus is not the end of the journey rather it is the start. Difficult steps make a company stronger, and one has to do what needs to be done.

Stephen Elop, the vice president of Microsoft Corp. (NASDAQ:MSFT), shared the company’s vision and focus plan with its employees in the e-mail. Stephen told the employees that the company will focus on Windows Phone by improving Lumia mobile device. He further mentioned that efforts will be made to improve windows phone volumes, and to make relatively more affordable smartphones.

It is pertinent to note here that Microsoft Corp. (NASDAQ:MSFT) is in a competition with two smartphones giants, Samsung (OTCH:SSNLF) and Apple (NASDAQ:AAPL). The smartphone industry is dominated by Apple’s iPhones and Samsung’s android phone, so Microsoft will have to come up with an innovative device that is more than just a traditional smartphone business.

Talking about investors’ reaction on this bold step taken by Microsoft Corp. (NASDAQ:MSFT), the traders are positive about the layoffs. Stocks of Microsoft Corp. (NASDAQ:MSFT) jumped up by 3 percent and reached the figures of $45.71. Note that it is the first time that Microsoft’s shares have reached to such high numbers during the year 2014.

On the last trading day, July 17, 2014, the company started its stocks at a price of $45.45 and closed at a price of $45.53, after reaching the highest figures of $45.71 for the first time in the year 2014. The company has a market capitalization of $367.84 billion and a price to earnings ratio of 16.7. As far as the dividend yield of the company’s stocks is concerned, the figures are reported to be around 2.52 percent.

Moving to other tech stocks, the shares of eBay Inc. (NASDAQ:EBAY) increased by 2 percent and reached the numbers of $51.70 after the company released its second quarter’s financial reports. Similarly, the share prices of International Business Machines Corporation (NYSE:IBM) soared by 2 percent and touched the figures of $195.82. However, the stocks of Google Inc. (NASDAQ:GOOG) were down to $585.75, with a decrease of almost $5 per share.