Only slightly more than a year since acquiring Nokia as the cornerstone of its mobility strategy, Microsoft Corp. announced on Wednesday that it is drastically reducing its staff in that division and taking a multi-billion dollar hit in writing off its assets.
In a statement issued by Microsoft, it said it is reducing up to 7,800 positions primarily in the phone business. It is all recording an impairment charge of $7.6 billion related to assets of Nokia Devices and Services in addition to a restructuring charge estimated to be between $750 million and $850 million. With the launch of Windows 10 slated for the end of the month, the news leaves Microsoft’s mobility plans up in the air.
Microsoft CEO Satya Nadella told employees that Microsoft is “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. In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
Microsoft completed the $7 billion acquisition of Nokia in April 2014, adding CEO Stephen Elop (who was also a former Microsoft executive) and the Finnish company’s line of Windows Phone-based devices to its corporate structure. Elop served as the executive vice-president of devices at Microsoft until recently. A June 17 announcement from the firm indicated Elop would be departing following a transition period as part of an engineering restructuring.
Terry Myerson was named the head of a new team at Microsoft, the Windows and Devices Group on June 17, taking over responsibilities formerly held by Elop. The new team also merged Microsoft’s devices group with its operating systems group.
Microsoft says more information about the changes will be coming on July 21’s fourth-quarter earnings announcement.