Microsoft cutting 7800 jobs as phone sales flag

Today’s plans were outlined in an email from Microsoft CEO Satya Nadella to Microsoft employees. Instead, the Windows smartphone has lost market share and is bleeding red ink.

The lay-offs come in addition to the 18,000 job cuts that were announced back in 2014 and are still in process.

IDC analyst Al Hilwa says it’s become clear that buying Nokia was probably a mistake and now Microsoft is trying to narrow its focus in the phone business to play to its strengths.

After this fresh round of job cuts, Nadella said that it is not required to focus on phone efforts in the near term while driving reinvention.

After its ill-fated Nokia acquisition brings the company an unexpected ill luck which is causing to 7,800 layoffs, Microsoft’s success seems to hinge on the software maker’s ability and self-abnegation to convince developers to create apps for the phone version of Windows 10.

Microsoft also has its Windows Phone business, which has struggled to remain competitive in an industry that is dominated by iPhone and Android (GOOGL) operating systems.

“I am committed to our first-party devices, including phones”, Mr. Nadella wrote in an email to his employees.

Along with writing down the value of that business, Microsoft Corp. said it will incur $750 million to $850 million in restructuring costs related to the cuts.

This reorganization, like many Microsoft shakeups we’ve seen over the past year, is meant to better align corporate strategy with the new priorities Nadella has implemented since stepping into the top position over a year ago.

While most of the job cuts will target the phone division, Nadella insisted that Microsoft will keep making smartphones. Ballmer projected that the deal will be Microsoft’s foray into competing with huge smartphone businesses such as Apple, Samsung, and Google. Similarly, it had also sold a part of its mapping business to Uber, who will also hire around 100 Microsoft employees.

In June, ex- Nokia CEO Stephen Elop left Microsoft, where he had served as head of the company’s devices group, responsible for phones, tablet computers and gaming consoles. It’s slated to announce fiscal Q4 earnings after the market close on July 21.

Microsoft is focusing on its big project, Windows 10, which is expected to arrive to the public at the end of this month. The stock closed at $44.24 on Wednesday and the company has a market cap of $356 billion.