Microsoft All But Silences Its Smartphone Business

Microsoft said it is cutting 1,850 jobs in its smartphone hardware units and will record a charge of $950 million.
Katie Kuehner-HebertMay 26, 2016

Microsoft on Wednesday said that it would cut 1,850 jobs in the company’s smartphone hardware business, as part of its efforts to streamline the unit in the face of continued weak sales. A majority — 1,350 — of the job cuts will occur in Finland, where the mobile business that Microsoft acquired from Nokia a couple of years ago originated.

As a result, the company will record an impairment and restructuring charge of about $950 million, of which about $200 million would relate to severance payments.

“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,” the Redmond, Wash.-based firm’s chief executive Satya Nadella said in a press release. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”

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Employees working for Microsoft Mobile Oy, a separate Microsoft sales subsidiary based in Espoo, Finland, would not be affected by the job cuts.

The workforce that had been remaining was but a mere fraction of the roughly 25,000 workers who had joined Microsoft as a result of the company’s acquisition of Nokia’s handset business in 2011, according to The New York Times.

As phone sales struggled, Microsoft in 2014 cut 18,000 jobs, most of them related to the Nokia deal, and last year, it eliminated an additional 7,800 jobs. It also reduced the number of smartphones it offered and took a $7.6 billion accounting charge, writing off nearly the entire value of the Nokia deal.

“The acquisition of Nokia’s mobile business will go down as one of the costlier missteps in Microsoft’s history,” the Times wrote.

Writing on Ars Technica, Peter Bright said: “…The move just underscores what a difficult strategic spot the company is in. Microsoft has been promising developers a single Windows platform, the Universal Windows Platform (UWP), that spans phones, tablets, PCs, Xboxes, HoloLenses, and anything and everything else that someone might want to run software on. With Windows 10, it was finally in a position to offer that platform.”

Despite the layoffs, Microsoft is continuing work on Lumia-branded phones, and it is also rumored to be working on its own Surface Phone, said VentureBeat.

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