Microsoft cuts 7,800 jobs in mobile phone division and takes $7.6bn write off after Nokia agreement.
D-day for many Microsoft employees could come soon, as Microsoft corp. plans to announce a new round of layoffs as early as Wednesday to cut costs further. The layoffs are anticipated to include those working in Microsoft’s hardware group, according to people briefed on the plans in a report by The New York Times.
Microsoft will cut 7,800 jobs and write billions off the value of its mobile phone division, just a year after buying the devices unit of Finnish technology giant Nokia.
The newspaper sources said that the latest job cuts are in addition to the 18,000 jobs that Microsoft said it intended to cut a year ago, a number that represents 18.18% of Microsoft’s overall employees, and counts as one of the largest round of layoffs by any company. Microsoft tries to become a cloud-computing and mobile-friendly software company.
Reuters could not immediately reach Microsoft for comment outside regular US business hours.
Microsoft’s MSFT management has been preparing staff members of this news for some time. In late June, CEO Satya Nadella sent a company-wide email rallying employees around a revised mission statement: “To allow every person and every organization on the planet to achieve more,” according to Geek wire.
However, he also warned of the coming times ahead, saying that Microsoft would need to “make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value.”
The job cuts are a part of an aggressive reshuffle of Microsoft’s business. In the month of June, it was reported that AOL would be taking over Microsoft’s ad sales business, a move that would affect around 1,200 Microsoft employees.
Last year, Microsoft acquired Nokia in a $7.2 billion deal that they hoped would make them a famous player in the smartphone market, where their Windows Phone operating system have continued to cede ground to the two leading mobile platforms, iOS from Apple AAPL and Android from Google GOOG .
In a message to staff, Mr. Nadella, who is only Microsoft’s third chief executive since Bill Gates founded the company 40 years ago, said the job cuts would take place “over the next several months”. It comes just three weeks after it emerged that former Nokia boss Stephen Elop, who moved to Microsoft along with the handset business, would leave.
The latest cuts, many of which will come in Nokia’s Finland base, represent 6.5pc of the company’s 120,000-strong workforce. Mr. Nadella said Microsoft’s mobile phone business wanted to be smaller and less motivated, working more closely with other parts of the company.
“We are moving from a strategy to grow an individual phone business to a plan to grow and make a lively Windows ecosystem including our first-party device family,” Mr. Nadella told the team.
The India-born 47-year-old has attempted to redeploy Microsoft on selling software, even induction programs that run on rivals’ devices, in a split from the company’s disgracefully competitive culture.
At the end of this month, Microsoft will launch Windows 10, its first new computer operating system since 2012, when it released the much-maligned Windows 8. Its success is seen as crucial to the company.