The New York Times – Microsoft said on Wednesday that it would eliminate up to 7,800 jobs, more than 6 percent of its work force, in a major overhaul of its struggling smartphone business.
The company also said it would take a $7.6 billion accounting charge related to its acquisition of Nokia’s handset operations, a clear acknowledgment that Microsoft’s foray into the mobile hardware business had borne little fruit.
While Microsoft will not stop making smartphones, the company’s chief executive, Satya Nadella, said on Monday that Microsoft would no longer focus on the growth of its own smartphone business, instead emphasizing the expansion of the broad “ecosystem” of products, including mobile phones, that ran its Windows software.
“I am committed to our first-party devices, including phones,” Mr. Nadella said in an email to Microsoft employees. “However, we need to focus our phone efforts in the near term while driving reinvention.
The company’s retrenchment in smartphones comes as Mr. Nadella, who became chief executive last year, has been pulling Microsoft back from initiatives outside its core mission.
Rather than catering to all smartphone shoppers, Microsoft said it would narrow its focus to three types of customers, including business users who wanted strong management, security and productivity apps, buyers at the low end of the market looking for inexpensive phones and Windows fans.
Last year, Microsoft laid off 18,000 employees, many of them who were also working in the company’s newly acquired smartphone business. Those layoffs are in addition to the 7,800 cuts, which mainly come from smartphones, announced on Wednesday. The majority of the latest layoffs will be outside Microsoft’s home base in the Seattle area, including in Finland, where Nokia originated.
At the end of March, Microsoft had more than 118,000 employees globally.
Microsoft executives have been hinting at more cutbacks for months. Mr. Nadella sent a companywide email in late June intended to rally employees for the coming year. But he also warned in the message that Microsoft would need to “make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value.”
In June, Microsoft said it was selling its online display advertising business to AOL, as the company exited a business for which it once had high hopes. In 2012, Microsoft signaled how its ambitions in the area had sputtered when it took a $6.2 billion accounting charge related to its acquisition of aQuantive, an online advertising company.
Microsoft has continued to lose market share in smartphones since acquiring Nokia’s handset business in 2014. The company has failed to turn the Windows Phone operating system, which runs on its handsets, into a vibrant alternative to the two leading mobile platforms, iOS from Apple and Android from Google.
Last month, the company said Stephen Elop, the former chief executive of Nokia who became a senior Microsoft executive after the acquisition, overseeing its devices business, would leave Microsoft.
The $7.6 billion charge that Microsoft said it would take during its fourth fiscal quarter, which ended June 30, is a noncash charge that reflected the declining performance of the smartphone business, which had continued to lose money and market share. Microsoft said it would also take a cash restructuring charge of between $750 million and $850 million related to the layoffs.
Article by Nick Wingfield for The New York Times
from Darlene Milligan http://ift.tt/1LScBh9 via local SEO company
from Tumblr http://ift.tt/1LXmLxW
No comments:
Post a Comment