My understanding, primarily from friends at Cisco which has its own history of acquisitions and layoffs is that this is roughly standard procedure, catastrophe or not.

Basically, there's always going to be a lot of overlap when acquiring another large company. Loads of people are made completely redundant and things that didn't come out via diligence are discovered.

There's a wait and see period where some people leave, followed by jockeying for position and finally layoffs of people who remain redundant and/or lacked the awareness to pursue either of the former two options.

Obviously, a merger which doesn't pan out would amplify the effect.

What I wonder is how much such a process actually affects the success of these mergers? Do the consultants and banks who assist in these sort of things have a variable to account the back-biting scramble that will take place in each first year?

http://www.overcomingbias.com/2010/03/hard-facts-mergers.htm...

'Cisco figured out that mergers between similar sized companies rarely work, as there are frequently struggles about which team will control the combined entity.'

I recall asking people there about why they didn't acquire certain companies that I thought would make a lot of sense from a technical / product perspective.

The typical answer was right in line with that quote - that Cisco stays away bigger companies that others might try to swallow at high cost.

That they look for logical acquisitions of specific products in the few hundred million dollar range, not billions.

Sure it is, there just happen to be exceptions.

Of the 21 years and 136 Cisco acquisitions with prices on Wikipedia, 14 come in over $1B. The average price overall is $530M, and the average price excluding >$1B deals with $178M.

http://en.wikipedia.org/wiki/List_of_acquisitions_by_Cisco_S...

http://en.wikipedia.org/wiki/List_of_mergers_and_acquisition...

I would be very surprised to discover that Google has acquired close to as many headcount as Cisco has. But I don't want to do the research work either. :)

In 2012 Google acquired Motorola Mobility with it's 20,000 employees.

http://www.dailymail.co.uk/sciencetech/article-2148219/Googl...

Google just bought out the patents of Motorola and dumped the company away to Lenovo afterwards. There was no merging, no redundant employee elimination process, like in other mergers.

Plus, this number is obviously a large outlier. An actual stats person would just go calculate the figures with the outlier removed- Cisco probably made much larger acquisitions, employee count-wise, than Google in that case.

Given the context, I guess it's some kind of product development order?

It's a document that's usually produced by a product management group in a company that outlines (very vague, almost laughably so) the "market requirements" - what users will want/need - for a given feature or set of features.

This is usually handed to developers/designers to come up with a "High Level Design" (HLD) that gives the "how" to the MRD's "what".

It's usually only seen in larger software companies.

Cisco is an engine for buying up small companies, digesting them, and extracting value from their products. It does not really do engineering or create its own product lines. As a result, it has polished the process of buying up companies, and progressively shutting them down while extracting the maximum sales value from the products that company has developed.

The key thing is that this is the core model of Cisco's entire business. It's actually not too rough on the people involved - the profits of the milking machine are shared fairly generously with the people being milked - but it is all about purchasing products with "potential future value" and converting it into cash, not creating new value.

Even if you are a high performer, being part of the now-controlled interest deals you something of the short stick, as they say.

If your company is acquired, be prepared to move on. Regardless of personal performance, they may give you no choice.

You might have the wrong criteria for acquisition success. I'm sure both Nokia and MS knew these layoffs would come before they agreed to the purchase.

I would think if I worked at Nokia and we were acquired by Microsoft, I'd probably be looking for another job fairly quickly. Considering the writing was on the wall for a while even before they were acquired by MS.

Those who stuck around through the merger and take take the first-round cuts offer will likely make out pretty well. Unfortunately for Microsoft, this means that they're largely paying for people with good strategic skills and a high capacity to find work elsewhere to leave.

It's the ones who stay put, largely out of lack of strategic skills and/or alternative options, who are going to be less valuable to the company. There may be further incentives but they're likely to not be as generous.

Or so say the rational expectations theorists.

It may be successful on a tax/accounting perspective since the purchase was made in € with cash that couldn't be brought to the US.

Yet this does look like a gigantic waste of assets. Warren Buffett says that a successful business is all about mindfully allocating its resources. This looks like the oppsite - no wonder that Nadella has a hard time explaining what happens in simple words.

http://www.reuters.com/article/2013/09/03/us-nokia-microsoft...

Yes, many. Think of the Lenovo-IBM deal -- massive success. The Facebook-Whatsapp deal is 2.5x bigger than this acquisition, we'll see how that works out (financially). Google-Youtube is a big one that can be considered as a big success as well. Ebay-Paypal. FB-Instagram.

The last three you mentioned are all tiny companies acquired for huge amounts of money.

YouTube had something like 60 people at acquisition -- definitely under 100. Instgram had under 20 I believe. Not sure about Paypal but I'm sure it was dwarfed by Ebay.

There is something to that. I think a smaller number of people can be integrated into a larger one, but when two massive companies like Microsoft and Nokia come together, there is bound to be friction.

Not sure what happened with Google and Motorola, but the companies were I think wisely kept separate, whereas it sounds like Nadella wants more "integration synergies".

These Uber mergers never seem to create any lasting value

I think you're overstating things tremendously here. ThinkPad is alive, and from the reviews I've seen, doing well. http://www.engadget.com/2014/03/28/lenovo-thinkpad-x1-carbon.... Many buyouts end with entire products being canned.

I still have an IBM ThinkPad. They were good quality back then, but I really think the standard-bearer today is MacBook.

New thinkpads are just like every other manufacturer's laptops, even the X line.

Lots. Of course, success is relative to for whom -- many of them work out well for shareholders of the acquired firm, many work out okay for shareholders of the acquiring firm, and the executives on both sides usually do well.

Of course, part of how it works out for those groups is that it, by design, doesn't work out well for the "human resources" that are production inputs.

You buy ailing companies and then cut fat. That's the plan, not evidence of a bad decision.

What was happening to Nokia WITHOUT getting bought and gutted? They were in a tailspin and had major internal friction issues getting good tech to the top of the consumer heap. They would be another Blackberry...

Oh wait, you also suggest Blackberry fight it out with their wet noodle of a product line?

As an employee, when you are acquired, you either are indispensable (and will not be made redundant) or you should probably head for the door so you aren't competing with your coworkers for spots when a flood of you are dumped into the market.

Microsoft got the products, IP, licensing deals and will be keeping a block of very productive employees. This is an obvious move and good for MS, MS shareholders, and, indirectly, consumers.

It should instead be "Microsoft saves half of Nokia's employees jobs."

Unfortunately, some acquisitions are for talent, others for revenue, others for customers, others for technology, or a mix, and the talent here may be a mix bag.

So if you're the selling CEO / board, you get to claim you sold the company whole, and if you're the buyer, you just blame the cuts on the increased efficiencies to be gained from combining the companies - it's a sign that the deal is "successful" and you're achieving the synergies you modeled before the purchase.

Businesses are never unprofitable because they have too many employees.

Businesses are unprofitable when management lacks the skills, the foresight, or the vision to make those employees profitable.

Edit: If this isn't obvious consider what a world-class entrepreneur could do with 12,000 experienced employees, a couple of billion in severance savings, and a kick-ass idea.

This is not a random question; this company exists.

Actually, I would say that by the time the deal rolled around the catastrophe had already played itself out at Nokia. It's sad what happened to Nokia, but the acquisition is the least of it.

edit: clarifying language

They have almost no marketshare in the US. So is it really the best non-Apple hardware, or does being the best not really even matter?