Microsoft has announced that it would be undertaking another round of layoffs, cutting up to 7,800 jobs, mostly from the mobile phone business recently acquired from Nokia. Microsoft’s current chief executive, Satya Nadella, announced a broad rethinking of the company’s phone strategy on Wednesday.
The company will also be writing off nearly all of the value of the Nokia acquisition. Microsoft said it would take a $7.6 billion accounting charge during its fourth fiscal quarter related to its acquisition of Nokia’s handset operations. Microsoft completed its acquisition of Nokia last year for $9.5 billion.
The way the job cuts are going, Microsoft will end up laying off a majority of the workers who joined the company as a result of the deal. The company laid off 18,000 employees last year, most of them also related to the Nokia acquisition. Nearly 25,000 employees joined Microsoft as a result of the deal.
The move is a clear acknowledgment that the deal for Nokia’s mobile phone business was a blunder. The deal was seen as Microsoft’s way of becoming a major player in the mobile market dominated by Apple, Google and Samsung. However, Microsoft has continued to lose market share in smartphones since acquiring Nokia’s handset business.
Mr. Nadella sent a companywide email in late June warning 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.” Microsoft now preparing to release a new version of its operating system, Windows 10, that will run on a variety of devices, including smartphones, PCs, tablets and the Xbox.
