Microsoft attempted to remedy that by buying Finnish handset maker Nokia’s smartphone business for $9 billion in 2013.
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Microsoft said Wednesday that it is taking a $7.6 billion charge and laying off as many as 7,800 employees as the company scales back the troubled phone hardware business it bought previous year.
This is the second round of job cuts since Satya Nadella took over as chief executive in February 2014. He further added, “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.” Microsoft said last July it could chop up to 18,000 jobs.
Microsoft also announced plans to write down the value of its Nokia acquisition, recording an impairment charge of US$7.6 billion.
Reports state that about a third of the layoffs will be in Finland, where Microsoft will shut down a product development unit, according to Finland’s national broadcaster YLE. However, it would not be completely deserting the smartphone business and plans to introduce a new version of its Windows operating system soon.
Last year, he announced a broad restructuring including cutting the 18,000 jobs, the biggest round of layoffs in the company’s history.
Rather than catering to all smartphone shoppers, Microsoft said it would narrow its focus to three types of customers: business users who want strong management, security and productivity apps; buyers at the low end of the market looking for affordable phones; and Windows fans. The mail spoke of the strategies that were being undertaken at Microsoft to grow a phone business that can be sufficient for it. The company has begun to streamline its efforts and focus on its core strengths, which includes the Microsoft Office software as well as cloud computing. 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. The company said it will also write down almost $7.6B related to the company’s Nokia business.
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“We believe these cuts are positive for Microsoft as they help streamline the business by getting rid of non-core components”, said Mark Moerdler, an investment analyst with Bernstein Research, in a note to investors.
