In an email sent to Microsoft employees on Wednesday, CEO Satya Nadella has revealed that the company would slash 7,800 more jobs, affecting 7 percent of its workforce.
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Microsoft is rebooting its phone business, writing off $7.6 billion from last year’s acquisition of Nokia and laying off thousands of workers in USA and Finland. Microsoft closed its $7.2 billion deal for Nokia in April 2014.
This reorganization, like many Microsoft shakeups we’ve seen over the past year, is meant to better align corporate strategy with the new priorities Nadella has implemented since stepping into the top position over a year ago.
The news follows Microsoft culling other divisions; it sold some of Bing Maps’ assets to Uber and its display advertising business to AOL.
But Nadella has been moving away from this strategy in order to focus on the company’s core software business and related services. The ex- CEO of Microsoft, Ballmer even effectively banned the usage of iPads from the National Basteball Association team. After seeing a slight rise in the morning, Microsoft shares closed Wednesday at $44.24, down 6 cents on a day when a number of tech stocks saw declines.
Nadella does explicitly refer to flagship devices, saying that the company tends to limit its focus to three consumer segments (value, business, and flagship phones). “They were heading in some directions that needed course correction, and he’s doing it”. The downsizing is expected to take place by the year-end, the Redmond, Washington based software behemoth said. This market is dominated by devices powered by Google’s Android system or Apple’s iOS. In a memo given to Microsoft employees, the CEO remarks that he is “committed to our first-party devices including phones”, but considers the wider implications of the announcement.
Microsoft can also continue using the Nokia name – which is now featured proudly on all its Lumia models. The software giant had more than 118,000 employees worldwide at the end of March.
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The majority of the job cuts coming from its phone business have not come as a surprise to analysts, but Nadella said that Microsoft will continue to make smartphones.
