Microsoft is to slash 7,800 jobs, with the axe falling primarily on its phone business, as well as taking an impairment charge of $7.6 billion relating to assets associated with the acquisition of the unit from Nokia.
The latest cull follows the company’s reduction of 18,000 jobs, or 14 per cent of its full-time workforce, almost exactly a year ago. That was the biggest layoff in the company’s history.
In addition to the huge impairment charge announced today, the company is also taking a restructuring charge of between $750 million to $850 million.
“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” said CEO Satya Nadella (pictured).
“In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
Back in June, it was announced that a new team headed by Terry Myerson called the Windows and Devices Group (WDG) will combine the existing Operating Systems Group and Microsoft Devices Group (MDG).
At the same time Microsoft announced four senior executives are leaving, including Stephen Elop, the former CEO of Nokia who headed Microsoft’s devices unit after its acquisition by the US company.
Microsoft will record a charge in the fourth quarter of fiscal 2015 for the impairment of assets and goodwill in its phone business, related to the acquisition of the Noka handset unit.
This charge will have no impact on cashflow from operations and is nondeductible for income tax purposes, it said.
Based on the new plans, the future prospects for the phone business are below original expectations, it said. Accordingly, the company decided to take an impairment charge on the unit’s assets and goodwill of approximately $7.6 billion.
The aim is to mostly complete the redundancies and financial actions by the end of the calendar year and fully complete by the end of the Microsoft’s fiscal year (end June 2016).