Microsoft has announced it will gut 1850 more jobs from its smartphone hardware business this year, with the bulk of job losses coming from Microsoft Mobile Oy in Finland. The $950 million business write-off (or “streamlining”, as Microsoft calls it) comes a week after the company sold off its feature phone division to Foxconn in a $350 million fire sale. It was nice knowing you, Nokia.
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It’s been a grim few days for Nokia/Windows Phone fans. First, Microsoft permanently washed its hands of the Nokia brand name by foisting it on a third-party company looking to resurrect it in the overcrowded Android market. Now, its shedding 1350 additional jobs from its Finnish phone division, plus another 500 related positions globally. This essentially kills off Microsoft as a serious player in the smartphone hardware market.
The company has confirmed that its “streamline plan” will impact up to 1850 jobs. “As a result, [Microsoft] will record an impairment and restructuring charge of approximately $950 million, of which approximately $200 million will relate to severance payments,” it said in a statement.
So where does this leave enterprise customers, business clients and the approximately 143 consumers who bought into the Windows Phone operating system? According to Microsoft CEO Satya Nadella, these customers will still be catered to with first-party hardware. Probably.
“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,” Nadella explained in a statement. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”
The phrases “differentiation”, “enterprise” and “Continuum” hint that Microsoft may still be plugging away at a Surface Phone. Or they could just be hollow corporate buzzwords. (It’s not like they’re going to say “our phone hardware division is dead. We totally screwed the pooch on this one. Soz.”)
Microsoft’s strategy of building its own phones was always going to be a gamble. To the sorrow of everybody involved, it didn’t pay off. This latest round of layoffs — Microsoft also culled 7800 staff in July last year — must surely be the final nail in the coffin. Unless, that is, we finally get that tricked-out Surface Phone. Fingers crossed, eh?
Here is the full announcement as it appears on Microsoft’s news portal:
Microsoft Corp. on Wednesday announced plans to streamline the company’s smartphone hardware business, which will impact up to 1,850 jobs. As a result, the company will record an impairment and restructuring charge of approximately $950 million, of which approximately $200 million will relate to severance payments.
“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,” said Satya Nadella, chief executive officer of Microsoft. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”
Microsoft anticipates this will result in the reduction of up to 1,350 jobs at Microsoft Mobile Oy in Finland, as well as up to 500 additional jobs globally. Employees working for Microsoft Oy, a separate Microsoft sales subsidiary based in Espoo, are not in scope for the planned reductions.
As a result of the action, Microsoft will record a charge in the fourth quarter of fiscal 2016 for the impairment of assets in its More Personal Computing segment, related to these phone decisions.
The actions associated with today’s announcement are expected to be substantially complete by the end of the calendar year and fully completed by July 2017, the end of the company’s next fiscal year.
More information about these charges will be provided in Microsoft’s fourth-quarter earnings announcement on July 19, 2016, and in the company’s 2016 Annual Report on Form 10-K.