Microsoft to cut 7,800 jobs; writes off $7.6 billion in Nokia deal

In a major restructuring of its mobile devices business, US tech giant Microsoft on Wednesday said it is writing off US $7.6 billion it spent on acquiring Nokia and will cut 7,800 jobs, but was silent on India impact.

“I want to update you on decisions impacting our phone business… We anticipate that these changes, in addition to other headcount alignment changes, will result in the reduction of up to 7,800 positions globally, primarily in our phone business,” Microsoft CEO Satya Nadella said in an email to employees.

He said that restructuring of phone business has led to an impairment charge of approximately US $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services business in addition to a restructuring charge of approximately US $750 million to US $850 million.

Microsoft had acquired mobile devices business from Nokia in a US $7.2 billion deal which concluded in April last year.

This is the second round of major job cut after Nadella took over as Microsoft CEO. About a year ago he announced axing up to 18,000 jobs, biggest cuts in its 39-year history.

After fresh round of job cuts, Nadella said that there is need to focus on phone efforts in the near term while driving reinvention.

“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family,” he said.

As per IDC report for the first quarter of 2015, mobile phones based on Android operating system dominated the market with 78% share, followed by Apple’s iOS. Windows-based phones stood at third spot with market share of 2.7%.

“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,” Nadella said.

As per the new strategy, Microsoft plans to narrow focus to three customer segments where it can make unique contributions and differentiate.

The company’s employee strength in India could not be ascertained.

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