Nadella said the company was facing a $7.6 billion “impairment charge” relating to its purchase of Nokia’s devices and services business previous year. Microsoft on Wednesday announced that to cut 7,800 jobs along with a reorganization of its Windows Phone unit which has struggled in the mobile market.
Advertisement
Microsoft CEO Satya Nadella told employees in an email that the company will continue to make mobile phones, but will focus on three customer segments.
Microsoft’s future in mobile devices likely hinges on the software-maker’s ability to convince developers to create apps for the phone version of Windows 10, after its ill-fated Nokia acquisition helped trigger 7,800 layoffs.
Nadella went on to say they would run a more focused phone portfolio for the time being while “retaining capability for long-term reinvention in mobility”.
Both the Nokia and aQuantive deals were engineered by ex- CEO Steve Ballmer, who sought to compete against younger, faster-growing tech companies by expanding beyond Microsoft’s original business of making software for desktop computers.
Additionally, the company will cut 7800 jobs from its phone business, with a lot of ex- Nokia execs getting laid off.
The vendor also said it will take a $750 million to $850 million restructuring charge to reorganize its handset business.
About 2,300 of the fresh cuts will hit Microsoft’s workers in Finland, according to a tweet from the country’s finance minister, Alexander Stubb. Last July, Microsoft said it would cut around 18,000 jobs.
Last year, he announced a broad restructuring including cutting the 18,000 jobs, the biggest round of layoffs in the company’s history.
As per IDC report for the first quarter of 2015, mobile phones based on Android operating system dominated the market with 78 percent share, followed by Apple’s iOS. “Adding on a mobile phone business that Microsoft probably should abandon is like attaching an anchor to said straitjacket and tossing the patient into the ocean”. It had 118,600 employees at the end of March, with about 60,000 of them in the U.S.
Advertisement
“In the longer term, Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly”, wrote Nadella.
