Microsoft Cuts 1,850 Jobs, Takes $950M Hit as It Scales Back Phone Business
Microsoft is scaling back its phone plans, but not exiting the market altogether.
Following Microsoft's announcement last week that it was selling off its feature phone business, the company today confirmed plans to "streamline [its] smartphone hardware business," resulting in 1,850 layoffs. Additionally, Microsoft will take a charge of $950 million, of which around $200 million is related to severance payments.
About 1,350 jobs are being cut at Microsoft's Mobile Oy office in Finland, with the rest coming from other offices around the world.
"We are focusing our phone efforts where we have differentiation--with enterprises that value security, manageability, and our Continuum capability, and consumers who value the same," Microsoft CEO Satya Nadella said in a statement. "We will continue to innovate across devices and on our cloud services across all mobile platforms."
The layoffs are expected to be "substantially complete" by the end of the year and fully complete by July 2017, which is the end of Microsoft's next fiscal year.
In a memo to staff obtained by Recode, Windows and Devices head Terry Myerson called today's changes "incredibly difficult."
"These changes are incredibly difficult because of the impact on good people who have contributed greatly to Microsoft," he said. "Speaking on behalf of Satya and the entire Senior Leadership Team, we are committed to help each individual impacted with our support, resources, and respect."
Myerson also made it clear that, while Microsoft is "scaling back" its phone business, the company isn't leaving it behind altogether.
"We’re scaling back, but we’re not out!" he said. "When I look back on our journey in mobility, we've done hard work and had great ideas, but have not always had the alignment needed across the company to make an impact."
In 2013, Microsoft bought Nokia's phone business for $7.2 billion. As CNET reports, the move did not exactly go to plan.
"Microsoft agreed to acquire Nokia's phone business in 2013 in an effort to become relevant in a phone market dominated by Apple's iPhone and companies such as Samsung that embraced Google's Android software. But the move failed to turn around the business," CNET's Stephen Shankland said.
For more on today's Microsoft announcements and what it means for the company, check out this CNET story.
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