Microsoft to Cut 6% of Workforce and Write Down Acquired Nokia Unit
The tech giant Microsoft Corp. announced that it will be cutting 7,800 jobs, nearly 7-percent of its workforce, and write down approximately $7.6 billion related to its Nokia phone business. The job cuts will be primarily in the company’s phone hardware business, accentuating its change in focus to software and cloud technology. About 2,600 layoffs will occur in Finland, a third of the total layoffs, as a product development unit there will be shut down.
Last July, Microsoft announced that it would cut up to 18,000 jobs. This job cut in particular serves as the second round of major layoffs since Satya Nadella took over as chief executive in February 2014. With over 118,000 employees worldwide as of March 31, Microsoft also announced a restructuring charge of approximately $750 - $850 million in its fourth quarter, ending June 30. Analysts predict that the layoffs will lower operating expenses by over $1 billion per year.
Although Microsoft has been focusing on cloud and enterprise software, the effort has not offset the company’s struggling sales in its Windows, Office, and phone businesses. In 2014, Microsoft paid $7.2 billion for Nokia’s handset unit in which the company was expected to write off all or part of. The acquisition of Nokia was completed last year for a total of $9.5 billion. This deal left Microsoft with only 3-percent of the smartphone market along with a struggling Nokia. Microsoft will be shifting their focus and adjust their marketing of smartphones towards a more specific crowd: business users who want strong management, security and productivity apps; buyers looking for inexpensive phones; and Windows fans. Although Microsoft will not stop producing smartphones, the company will no longer focus on growing that business sector. Instead, Microsoft will expand on the broad “ecosystem” of their products that run its Windows software.
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