Thursday, May 26, 2016
Microsoft lays off hundreds as it guts its phone business
Microsoft is signalling the end of its Nokia experiment today. After acquiring Nokia’s phone business for $7.2 billion two years ago, Microsoft wrote off $7.6 billion last year and cut 7,800 jobs to refocus its phone efforts. Microsoft is now writing off an additional $950 million today as part of its failed Nokia acquisition, and the company plans to cut a further 1,850 jobs. Most of the layoffs will affect employees at Microsoft’s Mobile division in Finland, with 1,350 job losses there and 500 globally. Around $200 million of the $950 million impairment charge is being used for severance payments.
These latest job cuts mean that the majority of former Nokia employees are no longer working at Microsoft. Microsoft plans to complete most of its job cuts by the end of the year. A small number of employees will remain in research and development roles, and Microsoft has a sales subsidiary in Finland that won’t be affected by the reductions. Microsoft originally hired 25,000 Nokia employees as part of its acquisition. Microsoft’s “streamlining” of its smartphone business comes just a week after the company announced it’s selling its feature phone business to FIH Mobile, a subsidiary of Foxconn, for $350 million.
“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” says Microsoft CEO Satya Nadella in a statement. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”
Nadella announced a “more effective and focused phone portfolio” almost a year ago, and one that focused on three areas: business, value phones, and flagships. Microsoft is refocusing its phone efforts once again, and it’s clear Microsoft is scaling back even further. “We’re scaling back, but we’re not out!” admits Terry Myerson, Microsoft’s head of Windows and devices, in an internal email. Myerson also adds that Microsoft’s “phone success has been limited to companies valuing our commitment to security, manageability, and Continuum, and with consumers who value the same.”