Microsoft cutting 7,800 jobs as phone sales flag

In a memo to staff, the company’s chief executive Satya Nadella said: “I am committed to our first-party devices including phones”. “In the near term, we’ll run a more effective and focused phone portfolio business while retaining capability for long-term reinvention in mobility”.

Microsoft said it would take the $7.6 billion charge during its fourth fiscal quarter, which ended June 30, and that it would be a noncash charge reflecting the declining performance of the smartphone business, which continued to lose money and market share.

This reorganization, like many Microsoft shakeups we’ve seen over the past year, is intended to better align corporate strategy with the new priorities Nadella has implemented since stepping into the top position over a year ago. While it still dominates the market for personal computers, Microsoft has struggled in the market for mobile devices, the majority of which are powered by the Android system or Apple’s iOS.

It was just past year that Microsoft acquired Finnish phone maker, Nokia’s handset business. Microsoft will also reduce the number of phones it releases and refocus its efforts into entry-level handsets, corporate devices given to employees and niche “Windows fans”, as reported by sources in the company.

The computing giant recently confirmed plans to lay off 7,800 employees and write down $7.8 billion from its acquisition of Nokia.

Microsoft is not killing off its phone business like many publications have hinted in the last few days.

According to The Telegraph, the recent job cut from Microsoft’s hardware division means that the company is gearing towards a future focused mainly on selling software. It will also need to fork out up to $850 million on restructuring.

The cuts may well mark a death knell for the company’s Windows Phone business, as it increasingly shifts from hardware to software and cloud computing.

Microsoft is trying to streamline its operations following the $7 Billion purchase of Nokia.

In a statement, Nadella asserted that he is endorsing to the first-party devices like phones, but the company will be focusing more on three key areas, such as, flagship smartphones, value phones, and enterprise.