Software major Microsoft today announced its decision to reduce up to 7,800 jobs and write off $7.6 billion – as part of its plans to restructure phone hardware business acquired from Nokia.
Microsoft will spend a whopping $850 million to manage the handshake. Just before the dramatic announcement, heads were rolled at the Microsoft headquarters. Senior team members who were leaving the IT major include former CEO of Nokia.
This is India-born Nadella’s second major restructuring of Microsoft. The U.S.-based Microsoft had 118,600 employees at the end of March, with about 60,000 of them in the U.S.
The new job cut represents about 7 percent of its workforce, compared to the 14 percent or 18,000 layoffs he announced last year in Nokia’s devices and services business, following Microsoft’s acquisition of the handset maker.
The IT giant today said it will write off $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services (NDS) business in addition to a restructuring charge of approximately $750 million to $850 million.
Earlier, Microsoft announced plans to transfer its imagery acquisition operations to Uber, and sell Microsoft’s display advertising business to AOL.
An emotional Microsoft CEO Satya Nadella said: “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.”
End of Nokia phone biz?
Not really. Microsoft CEO says the cloud and mobility company is moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes first-party device family of Lumia. The phone industry is yet to utilize Windows OS in a big way thanks to competition from Android. At least, Microsoft is not stopping the production of Lumia smartphones.
In the near term, Microsoft CEO said the company will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group. Nokia lost considerable market share even after the acquisition by Microsoft.
As per the new restructuring plans, Microsoft plans to narrow focus to three customer segments where it can make contributions and where it can differentiate through the combination of hardware and software.
“It’ll bring business customers the best management, security and productivity experiences they need; value phone buyers the communications services they want; and Windows fans the flagship devices they’ll love,” Satya Nadella said.
Microsoft CEO says the company’s reinvention of phone business will be centered on creating mobility of experiences across the entire device family including phones. Will Microsoft look at BlackBerry to step up its enterprise focus? CIOs need more strong suppliers in the enterprise phone market. Since Samsung is unable to match the expectations of IT heads and CIOs, will Microsoft play a major role there?