An impairment charge of approximately $7.6 billion will be recorded in relation to the acquisition of the Nokia devices and services business.
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The job cuts, announced by Microsoft chief executive Satya Nadella (inset), are to be concentrated principally on phone-related divisions of the company and those associated with Microsoft’s acquisition of Nokia. “We plan to narrow our focus to three customer segments where we can make unique contributions and where we can differentiate through the combination of our hardware and software”, said Nadella.
“I am committed to our first-party devices, including phones”, Nadella said in an email to Microsoft employees. The company will also spend up to $850 million on restructuring.
The majority of the latest layoffs will be outside Microsoft’s home base in the Seattle area, including in Finland, where Nokia originated.
The announcement points towards more tough times for Windows Phone. But he spoke of a changed focus, shifting more of Microsoft’s energy towards software, instead of hardware. Last year, the company revealed that it was looking to cut 12,500 jobs and pointed to its challenged phone business. According to Nadella, search is a core feature of everything Microsoft is doing, and a technology that impacts Cortana, Office 365, Windows 10, and Azure, Microsoft’s cloud platform. The mobile sector will bear the brunt of the layoffs that comes a year after 18,000 jobs were cut due to a restructuring.
This takes the burden of advertising away from Microsoft, who has been slowly leaving the display ads industry over the past several years and focusing on Bing’s search ads capabilities.
On Wednesday, Microsoft announced that it would write down about 80 percent of the $9.4 billion deal for Nokia’s handset business. It had 118,600 employees at the end of March, with about 60,000 of them in the US.
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In June, ex- Nokia CEO Stephen Elop left Microsoft, where he had served as head of the company’s devices group, responsible for phones, tablet computers and gaming consoles. But the purchase has failed to attract new users and Windows Phone still accounts for less than 5% of the market for mobile operating systems.
