Microsoft cuts 7,800 jobs: Admits Nokia buy was a mistake and writes-off $7.6bn

Nokia

Microsoft has today cut over 7,800 jobs, the majority from its struggling phone division, and write-off $7.6bn over its Nokia acquisition. The layoffs cast a shadow over the future of Windows for smartphones, or at least Microsoft’s role in building them, with the CEO Satya Nadella saying that for the moment the company plans a “focused phone portfolio” at least in the near-term. Shall we have any flagship Windows 10 smartphone in the near future? That is the question on everyone’s mind.

Microsoft says it expects to incur charges in the region of $750m-$850m around the restructuring. The impact of the cuts and the costs should mainly be felt by the end of the 2015 calendar year, it’s predicted, and be fully complete by the end of the fiscal year in 2016. CEO Nadella said;

[signoff icon=”quote-circled”]”We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family. In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”[/signoff]

The Nokia acquisition  had always been controversial, with the huge outlay strongly opposed both by many Microsoft shareholders as well as employees within the phone company. Today’s admission that the acquisition was in effect a failure – the write-off is more than the $7.2bn Microsoft actually paid for Nokia in the first place – will likely come as little consolation to those opposing voices. Stephen Elop – who had been Nokia’s CEO at the time of the acquisition, and was instrumental in its shepherding through – left last month.

Where this leaves Windows on phones  is still a mystery. Some speculate that Microsoft wants to cut ties with existing Lumia strategy – including low-cost devices for emerging markets – and instead look to universal apps, perhaps even spreading out its Surface branding beyond tablets and to a smartphone form-factor instead.

SHARE
28
Total