Microsoft Guts Mobile Hardware with 7,800 Job Cuts, $7.6 Billion Nokia Write Down
Microsoft (MSFT) raised its total number of job cuts in the last year to just shy of 26,000 as the vendor said it plans to lop off another 7,800 positions and write off some $7.6 billion connected to its Nokia purchase, in a move that wipes away nearly all of the value of the mobile phone business it acquired late in 2013.
The vendor also said it will take a $750 million to $850 million restructuring charge to reorganize its handset business.
Add this layoff to the one a year ago, mix in chief executive Satya Nadella’s reshuffling of his leadership team, his new mission statement, offloading the company’s ad display business to AOL, doubling down on Bing, and you have the new Microsoft with the boss’ imprint firmly on its culture and operations.
For Microsoft, the last month or so has been monumental in affixing the cloud-first, mobile-first mantle to every aspect of its business and for shedding operations that didn’t fit with its new knitting. It’s hard to say that Microsoft’s vision and has been this clearly delineated since its early days under founder Bill Gates.
Microsoft said it will pare back its mobile initiative from selling handsets to trying to win customers to the Windows 10 platform and associated services. Whatever phone models it retains will be designed to build business for its software and services and to extend its mobile ecosystem.
“I don’t take changes in plans like these lightly, given that they affect the lives of people who have made an impact at Microsoft,” Nadella said, in an open letter to employees.
“I am committed to our first-party devices including phones. However, we need to focus our phone efforts in the near term while driving reinvention. We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family,” he wrote.
“In the near term, we will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group,” said Nadella.
Microsoft didn’t offer much in the way of details on the job cuts, such as geographies and job functions affected, other than to identify Windows Phone hardware as the target for most of the position losses.
Finnish website Yle reported that up to 2,300 jobs will be lost in Finland when Microsoft shutters its Salo operation, the location of Lumia phone manufacturing, and moves functions to its facilities in Tampere and Espoo. The vendor employs some 3,200 people in Finland, Yle said.