Microsoft to Cut 7,800 Jobs in its Nokia Phone Business
Microsoft Corporation said on Wednesday that it intends to slice 7,800 jobs or an estimated of 7% of its workforce. In the same statement, the technology giant also said that it would write down about $7.6 billion related to its phone business under Nokia.
A larger percentage of the job cuts will occur in the phone hardware section, an indication that the company is committed to shifting focus from hardware to software and cloud. According to YLE, the national broadcasting corporation for Finland, about a third of the job cuts will affect Finland, where Microsoft would shut down a product development facility.
This is the second time that Microsoft is laying off its workforce since the entry of the new CEO, Satya Nadella in February 2014. It confirms the initial statement released by Microsoft that it would cut up to 18,000 jobs.
Although Nadella has been focused on the cloud and enterprise software capabilities of Microsoft, investors have raised concerns that the shift to cloud was inappropriate in salvaging the weakening sales of Windows and Office, as well as the poorly performing phone business.
Microsoft was expected to clear all or part of the $7.2 billion that it paid for the acquisition of Nokia in 2014, and this pushed the company into a struggling position with only 3% of the smartphone market.
Last month, Microsoft announced that the former Nokia top boss, Stephen Elob would exit.
In a note written by FBR Capital Markets Analyst Daniel Ives, he says that, ‘’overall, we believe that the proactive approach by Microsoft CEO at cleaning up the acquisition of Nokia is a positive ‘’tipping of the hand’’ around the future focus of the technology giant on software.’’
The company which had a global workforce of more than 118,000 as of March 31 also said that it would take restructuring charge of an estimated $750 to $850 million in its fourth quarter, which ended on June 30.
Since Nadella took office in February last year, Microsoft has experienced a rise of about 22%.