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Microsoft's massive layoffs not expected to hit Fargo; fate of Fargo's Nokia operation unclear

A view of Microsoft and Nokia signs in Peltola, Oulu July 16, 2014. Microsoft Corp said on Thursday it would cut up to 18,000 jobs, or about 14 percent of its workforce, as it halves the size of its recent Nokia acquisition and trims down other operations. Picture taken July 16. REUTERS/Markku Ruottinen/Lehtikuva

Microsoft said on Thursday it will slash up to 18,000 jobs, or 14 percent of its workforce, over the next 12 months as it almost halves the size of its newly acquired Nokia phone business and tries to become a cloud-computing and mobile-friendly software company.

The Microsoft campus in Fargo does not expect any of its nearly 900 employees to be laid off, according to Sen. John Hoeven, R-N.D.

“With the company’s layoff announcement, we’re appreciative that those layoffs aren’t expected to take place in North Dakota,” he said.

Hoeven said he received that information Thursday from Don Morton, site leader at the Fargo campus.

Microsoft Fargo directed all questions Thursday to a Seattle-based public relations firm, which couldn’t answer questions about local impacts.

In addition to the 877 full-time employees at Microsoft in Fargo, nearly 700 others at the south Fargo campus do work for vendors of the company.

In addition to research and development, Microsoft Fargo specializes in customer service, inside sales, as well as managing the company’s U.S. payroll and global headcount operations.

About 12,500 of Microsoft’s layoffs will come from eliminating overlaps with the Nokia unit, which Microsoft acquired in April for $7.2 billion, with the bulk of the cuts coming from Nokia itself. The acquisition of Nokia’s handset business in April added 25,000 people to Microsoft’s payroll.

The Nokia-related cuts were widely expected. When it struck the deal, Microsoft said it would cut $600 million per year in costs within 18 months of closing the acquisition.

Fargo also has a Nokia operation at 1715 Gold Drive S., along Interstate 94 just east of 25th Street.

Formerly Navteq, it employs about 250 people who create maps and detailed three-dimensional renderings used by consumers online, on smartphones and in automobile navigation devices.

Calls to Nokia in Fargo were directed to its national headquarters. Messages left there were not returned.

Fargo’s Nokia trimmed 50 jobs in 2013 as part of a “streamlining” effort.

Simplifying structure

Microsoft’s larger-than-expected cuts are the deepest in the software giant’s 39-year history and come five months into Nadella’s tenure.

Beyond the Nokia reductions, Nadella gave few clues about where the ax will fall or what areas will receive more funding.

One source briefed on the cuts said a major victim would be the 175-strong Xbox Entertainment Studios unit, which will start to wind down efforts to create original content. But it will continue to work on its highest-profile project, a filmed version of the blockbuster ‘Halo’ videogame.

Nadella said he will answer questions from employees at a town hall meeting today at Microsoft headquarters in Redmond, Wash., and flesh out his plans publicly after Microsoft’s quarterly earnings report on July 22.

“We will simplify the way we work to drive greater accountability, become more agile and move faster,” Nadella wrote to employees in a memo made public early Thursday. “We plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision-making.”

Re-hiring could happen

The size of the cuts were welcomed by Wall Street, which was critical of the Nokia acquisition and viewed Microsoft as bloated under previous CEO Steve Ballmer, topping 127,000 in staff after absorbing Nokia earlier this year.

“This is about double what the Street was expecting,” said Daniel Ives, an analyst at FBR Capital Markets. “Nadella is clearing the decks for the new fiscal year. He is cleaning up part of the mess that Ballmer left.”

Microsoft shares rose 1.8 percent to $44.88 on Nasdaq, reaching their highest since the technology stock boom of 2000.

Biggest cuts since 2009

About 1,100 jobs will be cut from Nokia’s original home country of Finland, according to government and union representatives there, with about half coming from the closure of its research and development operation in the northern city of Oulu.

As part of the integration of Nokia, Microsoft is abandoning its experiment in making phones powered by Google’s Android system, moving some of its Nokia X line of phones onto Windows phone software.

Nadella’s cuts are the biggest at the Redmond, Washington-based company since Ballmer axed 5,800, or about 6 percent of headcount, in the depths of the recession in early 2009.

The new CEO’s moves are designed to help Microsoft shift from being a primarily software-focused company to one that sells online services, apps and devices it hopes will make people and businesses more productive. Nadella needs to make Microsoft a stronger competitor to Google and Apple, which have dominated the new era of mobile-centric computing.

Marking this change of emphasis, Nadella last week rebranded Microsoft as “the productivity and platform company for the mobile-first and cloud-first world.”

Microsoft is not alone among the pioneers of the personal computer revolution now slimming down to adapt to the Web-focused world.

PC-maker Hewlett-Packard Co is in the midst of a radical three-to-five-year plan that will lop up to 50,000 from its staff of 250,000.

International Business Machines Corp is undergoing a “workforce rebalancing,” which analysts say could mean 13,000, or about 3 percent of its staff, being laid off or transferred to new owners as units are sold.

Chipmaker Intel and network equipment maker Cisco Systems both said in the past year they were cutting about 5 percent of their staff.