Microsoft To Shed 7,800 Jobs, Write Down $7.6B from Nokia Deal

Redmond is cleaning house. Microsoft just announced plans to restructure its phone hardware business to better focus and align resources. Part of that alignment translates to layoffs. Microsoft will cut up to 7,800 positions, primarily in the phone business.

The result: an impairment charge of about $7.6 billion related to assets connected to its Nokia Devices and Services business acquisition. ThatEUs on top of a restructuring charge of between $750 million and $850 million.

EUWe 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,EU Microsoft CEO Satya Nadella (pictured) said in a letter to Microsoft employees outlining the plan. EUIn the near-term, weEUll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.EU

An Expensive Mistake?

After acquiring NokiaEUs handset business for $7.5 billion in 2014, Microsoft almost immediately moved to rebrand the Nokia product line. Microsoft closed on the buy of NokiaEUs Smart Devices business unit, including the Lumia brand and products, in April then changed the name from Nokia Lumia to Microsoft Lumia in October.

A reorganization after a merger is not unusual. But is this mass reorganization a sign the merger failed? We asked Jeff Kagan, an independent technology analyst, for his thoughts on the reorg.

EUWhen Microsoft initially made the move to acquire Nokia, the reasoning made sense, but the chances for success were weak at best,EU said Kagan. EUMicrosoft needed to update its operating system and get into mobile.EU

Nokia was a leader in plain old wireless handsets until the Apple iPhone and Google Android phones hit the market, then the company essentially crashed and burned, he said. Now this.

EUMoving into wireless successfully is proving to be quite difficult except for the industry leaders like Apple...

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