Microsoft to cut 7,800 jobs, write down $7.6 bn loss

Computer giant Microsoft yesterday said that it would cut up to 7,800 worldwide jobs and write down a $7.6 billion loss, mostly from its phone business, writing off nearly all the $9.5 billion it paid to acquire Nokia just two years ago.

''Microsoft Corp. today announced plans to restructure the company's phone hardware business to better focus and align resources,'' the Washington-based company said in a statement.

''Microsoft also announced the reduction of up to 7,800 positions, primarily in the phone business. As a result, the company will record an impairment charge of approximately $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 $750 million to $850 million.''

Microsoft CEO Satya Nadella had recently warned of making tough choices soon. The majority of the job cuts coming from its phone business have not come as a surprise to analysts, but Nadella said that Microsoft will continue to make smartphones.

''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,'' Nadella said. ''In the near-term, we'll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.''

This is the e second-biggest layoff in Microsoft history after it last year announced 18,000 layoffs, most of them also related to the Nokia acquisition.

A majority of the latest layoffs will be outside Microsoft's headquarters, most of it in Finland, where Nokia was originally based. Nearly 25,000 employees joined Microsoft post acquisition.

The company's job cuts in smartphones comes as Nadella, who became CEO last year, had initially opposed the Nokia acquisition made in the last months of his predecessor Steve Ballmer.

Microsoft had agreed to buy Nokia's handset unit in September 2013, weeks after Ballmer announced he would retire within the year, and the deal was completed in April 2014, two months after Nadella became the CEO.

The acquisition now appears to be a costly blunder since Microsoft has continued to lose market share in smartphones since acquiring Nokia's handset unit.

The company's market share of the global smartphone-operating-system market was 2.7 per cent in the first three months of 2015, according to IDC, and Microsoft had in April warned that the phone unit's performance had worsened despite job and cost cuts.