Microsoft writes down about $7.6 billion losses.
By Raif Karerat
WASHINGTON, DC: Just 14 months after Steve Ballmer had Microsoft swallow Nokia’s mobile phone business in a $7.2 billion deal, Microsoft’s current chief executive, Satya Nadella, has cut its losses and announced the company plans to cut as many as 7,800 jobs and write down about $7.6 billion on its Nokia phone-handset unit.
The move wipes out out nearly the entire value of a business that failed to gain any market share whatsoever since it was acquired last year.
The Nokia deal was seen as Steve Ballmer’s baby, according to Fortune. The former Microsoft CEO was obsessed with making Microsoft’s mobile business competitive with Android and Apple devices.
“It’s a headache that Nadella inherited,” Daniel Ives, an analyst at FBR Capital Markets, told the New York Times. “It is really cleaning up Ballmer’s mess.”
The job cuts amount to more than 6 percent of Microsoft’s global work force. Combined with 18,000 job cuts last year, most of them also related to the Nokia acquisition, Microsoft will end up letting go a majority of workers who joined the company as a result of the deal.
While Microsoft will not halt the production of smartphones, Nadella said Wednesday that the tech giant would no longer focus on the growth of that business, and instead emphasize the expansion of a broad “ecosystem” of products.
“I am committed to our first-party devices, including phones,” Nadella said in an email to Microsoft employees. “However, we need to focus our phone efforts in the near term while driving reinvention.”
According to The Times, rather than catering to all smartphone shoppers, Microsoft intends to narrow its purview to three types of customers: business users who want strong management, security and productivity apps, buyers looking for inexpensive phones, and Windows aficionados.