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Microsoft axes 18,000 jobs as Nadella shifts focus
by Staff Writers
New York (AFP) July 17, 2014

Google profit up as chief business officer steps out
San Francisco (AFP) July 17, 2014 - Google reported Thursday that its quarterly profit rose with a jump in revenue and released word that its chief business officer was leaving the company.

High-profile executive Nikesh Aurora took a moment on the earnings call to thank Google for a "phenomenal" 10 years and said he looked forward to "cheering them on from the sideline."

Arora will be replaced in the interim by Omid Kordestani, a business founder who led Google's sales teams.

Google chief financial officer Patrick Pichette steered talk on the call away from Aurora's career move to a job at Japan's SoftBank, saying he wanted to keep focused on freshly-released quarterly earnings figures.

- Paid clicks pop -

The California-based Internet titan said its profit jumped during the three months ending June 30, rising six percent from a year ago to $3.42 billion.

Revenue was up 22 percent year on year, at $16.0 billion.

"We are moving forward with great product momentum and are excited to continue providing amazing user experiences, with a view to the long term," Pichette said.

Google shares rose slightly more than a percent to $580.69 in after-market trading that followed release of the earnings figures.

Google said a key factor in revenue was the jump in "paid clicks," for ads related to searches on Google and its partner sites.

Total paid clicks were up 25 percent from a year ago and two percent from the past quarter, while the average cost per click was down six percent from a year earlier.

Google is the leader in digital advertising with a 31.9 percent share of the global market in 2013, according to the research firm eMarketer. The closest rival was Facebook with 5.8 percent.

According to eMarketer, Google has more than 50 percent of the worldwide mobile ad market.

Google's profit per share was $6.08, about 16 cents below analyst forecasts but revenues were better than the average estimate of $15.6 billion.

- Self-driving cars -

While Google makes most of its money from digital advertising, it has been moving into new areas such as home automation, self-driving cars and wearable technology like Google Glass.

Pichette told analysts that Google takes a venture capitalist approach to new projects, calling on teams to hit milestones and make their cases when it comes to being funded.

With projects such as autonomous cars underway in the Google X lab, payoff could be years away, while new software creations could generate faster returns.

Google's Chrome and Android operating systems will be wound more tightly together as the technology titan makes a priority of providing experiences and services that transition smoothly from one screen to another to be in tune with arrays of devices becoming common in people lives.

"They are basically converging," Pichette said of Android-powered mobile devices and the Chrome operating system for computers that essentially act as gateways to the Internet.

"We have a lot of cross-pollination of teams."

The chief financial officer told analysts that Google has about 60 percent of its cash reserves outside the US and that there was an "interesting case" for keeping it there.

"We do have great opportunities outside the US to invest our cash," Pichette said, noting opportunities for acquisitions, building data centers and expanding offices.

He added that Google has "exciting plans" for its capital in the Asia Pacific and Europe regions.

Microsoft announced its biggest job cuts ever Thursday as new chief executive Satya Nadella called for a new focus at the US tech giant while integrating the Nokia phone division.

The company said it would slash 18,000 jobs from its global workforce over the next year, the majority from the Nokia handset unit acquired this year.

The cuts represent about 14 percent of Microsoft's global payroll of some 127,000. The company will take a charge of between $1.1 billion and $1.6 billion for costs related to the layoffs.

Of the total, some 12,500 professional and factory positions from Nokia "will be eliminated through synergies and strategic alignment," Microsoft said.

Nadella said in an email to employees that the "difficult but necessary" cuts are part of a plan to bring a new direction to the tech titan based in Washington state.

"The first step to building the right organization for our ambitions is to realign our workforce," he said.

"It's important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas."

Nadella added that "we are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months."

Microsoft completed its takeover of Nokia's phone unit in April in a move that strengthened its position in mobile devices. The cost was around $7.5 billion.

The moves come with Nadella, who became CEO earlier this year, seeking to reinvigorate a company that had been the world's largest but which has lagged in recent years as Google and Apple have taken leadership of the tech sector.

Nadella said the restructuring "will simplify the way we work to drive greater accountability, become more agile and move faster," and would mean "fewer layers of management, both top down and sideways."

The job cuts are far bigger than the last major reboot for Microsoft in 2009, when it eliminated 5,800 jobs.

- No more Android phones -

As part of the shift, Microsoft will make a new push on smartphones, where it has managed to win only a modest market share for its Windows Phone platform.

"We will be particularly focused on making the market for Windows Phone," said an email to employees from Stephen Elop, the former Nokia chief who now heads the Microsoft Devices unit

"In the near term, we plan to drive Windows Phone volume by targeting the more affordable smartphone segments, which are the fastest growing segments of the market, with Lumia," he said, referring to the Nokia-branded device.

Elop said that Microsoft will put its Nokia X phones -- which use the Google Android platform -- on the Windows Phone platform.

"We expect to make this shift immediately while continuing to sell and support existing Nokia X products," he said.

Analyst Jack Gold at J. Gold Associates said the changes are "the first major salvo in the Nadella era" and appear positive.

"I believe that Nadella gets the fact that Microsoft can't be Apple -- a totally vertically integrated environment, and will refocus on cloud, services and software assets that are growing and profitable," Gold said in an email.

"This is a similar path that Google took over the past few years as it too tried to be Apple for a while and realized it couldn't."

Windows Phone has managed to garner only about three percent of the global smartphone market, compared with around 80 percent for Android.

Elop said Microsoft will aim for "breakthrough products" in the premium smartphone segment while building up the Windows app ecosystem.

Under the new organization, phone engineering efforts will be led mainly from Finland, with reductions in China and the United States.

Phone production will be mostly in Vietnam, with some operations continuing in China, Elop said. Some manufacturing and repair operations will be shifted to Brazil and Mexico amid a "phased exit" from Hungary.

Also being eliminated will be the Xbox Entertainment Studios, which had been established for original programming for the Microsoft home console, according to an internal memo leaked online.

Microsoft shares rallied 1.02 percent to close at $44.53 -- a 14-year high -- as analysts said the reorganization would help the company better compete with rivals.

"Most investors have anticipated a workforce reduction; however, the magnitude and speed of the reduction should be well received" by investors, said Robert Breza at Sterne Agee.

Microsoft to shutter Xbox television show studio
San Francisco (AFP) July 17, 2014 - Microsoft on Thursday confirmed that its studio devoted to original television programs for Xbox consoles will be shuttered as part a massive overhaul of the workforce.

Projects started by Xbox Entertainment Studios will be completed, but the unit launched as part of a push to expand the consoles beyond gaming will be shuttered in coming months, the US technology titan told AFP.

During a major E3 video game industry gathering in Los Angeles in June Microsoft brought the focus back to games in a shift from stressing how Xbox is evolving into a multipurpose entertainment center for films, television, music, and more.

Closing Xbox Entertainment Studios is part of an unprecedented workforce reduction announced by Microsoft chief Satya Nadella, according to a copy of a memo sent by Xbox head Phil Spencer to his team.

Leaked copies of Spencer's memo were posted online.

"We will continue to enhance our entertainment offering on console by innovating the TV experience through the monthly console updates," Spencer said in the memo.

"Additionally, our app partnerships with world-class content providers bringing entertainment, sports and TV content to Xbox customers around the world are not impacted by this organizational change in any way and remain an important component of our Xbox strategy."

Programming already in production included a documentary looking at the rise and fall of video game pioneer Atari and a series spun from blockbuster video game "Halo."

Word that Xbox Entertainment Studios is being closed came shortly after Microsoft announced that US sales of its new-generation Xbox One console more than doubled in June.

The jump in sale was credited to the release of a version of the Xbox One priced $100 less than the original packaged model because a gesture-sensing Kinect camera accessory was removed from the bundle.

The Xbox One launched in November priced at $499 and included Kinect.

Microsoft did not provide sales numbers for Xbox consoles in June.


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