Microsoft to Cut 7800 Jobs as Phone Unit Struggles

Microsoft announced the .2 billion takeover of Nokia in September 2013, finalizing the acquisition in April. Nokia CEO Stephen Elop and Nokia head of phones Jo Harlow both left Microsoft in June.

“I want to discuss our plans to focus our talent and investments in areas where we have differentiation and potential for growth”, wrote CEO Satya Nadella in a company note.

For Microsoft, the last month or so has been monumental in affixing the cloud-first, mobile-first mantle to every aspect of its business and for shedding operations that didn’t fit with its new knitting. Analysts have said the Nokia business was a drag on Microsoft’s profits.

Nokia Corporation (ADR) (NYSE:NOK)’s stock on 08 July traded at beginning with a price of $6.38 and when day-trade ended the stock finally decreased -3.22% to end at $6.32.

A Microsoft spokesman said the cuts were all about focusing the company on core businesses, which was why it just sold some of its mapping business and ad sales business to AOL.

The news came as little surprise to industry watchers. “They were heading in some directions that needed course correction, and he’s doing it”.

The Guardian reported that since Microsoft bought the Lumia division, the company released various consumer products that were not very well-received by users. The downsizing is expected to take place by the year-end, the Redmond, Washington based software behemoth said.

After Nadella took over Microsoft, he made it clear that he would have to make aggressive changes to revitalize the company. It failed to attract users with its new invention, and its phone still covers less than 5 per cent of the market for mobile operating system. “However, we need to focus our phone efforts in the near term while driving reinvention”. The mobile sector will bear the brunt of the layoffs that comes a year after 18,000 jobs were cut due to a restructuring.

The job cuts amount to more than 6 percent of Microsoft’s global work force.

Also, the phone business wasn’t the only unit that was struggling. Most of the cuts at the U.S. tech giant will be in the phone division, and the company will write down the value of its phone business acquired from Nokia by some $7.6bn.