Microsoft plans to cut as many as 7,800 jobs and write down about $7.6 billion on its Nokia phone- handset unit, wiping out nearly all of the value of a business it acquired just 14 months ago. However the move is not expected to impact on its Irish operations.
The company also will record a restructuring charge of about $750 million to $850 million as it reorganises its phone hardware business under chief executive officer Satya Nadella, said on Wednesday. Microsoft had about 120,000 employees at the end of March.
“In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility,” Mr Nadella said.
The company will scale back its mobile ambitions from focusing on selling as many mobile devices as possible to concentrating on a narrower mission and set of customers to support the Windows device market, he said.
Mr Nadella wasn't more specific and spokesman Pete Wootton declined to comment further.
The latest round of job cuts – which include 2,300 in Finland, where Nokia is based – come a year after Microsoft said it would let go of 18,000 employees, and less than two weeks after the company announced plans to exit the Web display advertising business.
Since becoming CEO last year, Mr Nadella has been acquiring mobile and cloud software makers, and cutting units not central to his strategy.
Last month, the 47-year-old executive made his biggest overhaul since taking over, revamping his leadership team to reflect a focus on three areas: personal computing, cloud platforms and productivity and business processes.
As part of that announcement, Stephen Elop, the former CEO of the Nokia handset business that Microsoft bought last year, would step down.
Microsoft purchased Nokia's handset business in April 2014 for $9.5 billion, including $1.5 billion in acquired cash. Seven months earlier, then-CEO Steve Ballmer announced plans to acquire the Finland-based unit as a last-ditch effort to gain users for Microsoft's Windows Phone software, which had been languishing at less than five per cent of the market for mobile operating systems.
The deal hasn’t boosted Windows Phone’s market share, however, and Microsoft loses money on every phone it sells, even before accounting for research and development and sales and marketing. Before Wednesday, the business had cut more than 10,000 jobs.
The writedown is Microsoft’s biggest since a $6.2 billion charge in 2012 on the purchase of Internet ad company AQuantive Inc.
It took five years for the company to record the AQuantive charge.
- Bloomberg
