Microsoft Cuts 7800 Jobs as Phone Sales Flag

The company paid $7.3 billion for Nokia’s phone business in April 2014, seeking to push rapidly into the smartphone sphere as its traditional software business slowed. The job cuts represent about 6% of the total work force of the company, and will be targeted mainly at the hardware division, specifically mobiles, as Microsoft re-aligns its strategy.

With regard to Microsoft’s strategy change, Nadella said: “In the near term, we will run a more effective phone portfolio, with better products and speed to market given the recently formed Windows and Devices Group”.

Some 2,300 of the 7,800 layoffs announced in the memo will be in Finland, where Nokia is based. According to some estimates, the venture may have lost the company as much as $9.7 billion since. About half of those, 12,500, were jobs associated with the Nokia unit.

The company’s employees were told by Mr. Nadella that he was committed to their first-party devices, together with phones.

The layoffs will primarily come in the troubled phone hardware unit but won’t be limited to that business.

Would you be happy with 4-6 solid smartphones from Microsoft each year? While that doesn’t mean there won’t be any new Windows phone, it certainly doesn’t look good moving forward.

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

Last month we pointed out that Stephen Elop, the ex- top boss at Nokia was leaving Microsoft for a second time.

The move is a clear acknowledgment the deal was a multibillion-dollar strategic blunder by Ballmer, who had envisioned it as a way to make Microsoft more competitive in the mobile market dominated by Apple Inc., Google Inc. and Samsung Electronics Co. Ltd.

At the end of March, Microsoft had more than 118,000 employees globally. Microsoft has confirmed that it won’t release its next flagship Windows Phone until Windows 10 Mobile is available. That same month, Mr. Ballmer said, “Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen… our entire family of devices and services”.