CALIFORNIA: Microsoft Corp could cut as many as 1,850 jobs and take a new impairment charge as chief executive officer Satya Nadella pares back the company’s ambitions in smartphones.
The company is to book a US$950 million impairment and restructuring charge, including US$200 million for severance payments, Microsoft said in an e-mailed statement.
About 1,350 jobs are to be cut in Finland, the base of the handset business it acquired from Nokia Oyj in 2014.
Nadella has already written off most of the US$9.5 billion Nokia deal led by former Microsoft CEO Steve Ballmer, shifting its Windows phone strategy toward business customers as it struggles to compete with Apple Inc and vendors using the Android operating system.
In July last year, the company said it planned to cut as many as 7,800 jobs and write down the handset business by US$7.6 billion, while earlier this month it agreed to sell its feature-phone unit.
“We are focusing our phone efforts where we have differentiation,” Nadella said in the statement.
“We will continue to innovate across devices and on our cloud services across all mobile platforms,” he said.
Redmond, Washington-based Microsoft expects to complete most of the announced actions by the end of this year with further details to be released with fourth-quarter earnings in July.
Last week, Microsoft announced that it would sell its feature-phone business to FIH Mobile Ltd— a handset manufacturing arm of Hon Hai Precision Industry Co— and Finnish company HMD Global Oy for US$350 million.
Nokia is to license its brand to Helsinki-based HMD Global Oy, which is to be in charge of designing, making and selling the devices, while FIH Mobile is to help to build the devices, the companies said on Wednesday last week.
Windows phones had less than 1 percent of the global smartphone market in the first quarter, according to Gartner Inc. That compares with Android’s 84 percent and 15 percent for Apple’s iOS.
The cuts are a further blow to Finland, which is struggling to reduce unemployment and revive an economy hurt by Nokia’s mobile-phone demise. Microsoft would be left with a skeletal crew in the nation where Nokia once employed thousands of mobile-phone workers when it dominated global handset sales.
Nadella has been trying to revitalize the company that was once known mainly for personal-computer software by focusing on Web-based services and productivity applications. The company is slashing costs and concentrating on Windows 10 to restore growth in PCs.
While Microsoft’s push into smartphones has not worked out as planned, the company continues to develop hardware such as its Surface tablet computers. Last year, the company unveiled its first laptop.
When Nadella stepped into the helm two years ago, he inherited division over the company’s strategy, people familiar with the matter have said.
Ballmer faced significant pushback internally for his plan to acquire Nokia, while Nadella was initially against the move into smartphones.
Microsoft had 112,689 employees at the end of last year.
