Microsoft ready to take $950 million hit on smartphone business

Microsoft is planning another major cut back in its smartphone hardware operations, leading to around a $950 million writedown and 1,850 job cuts.

Microsoft will layoff 1,350 jobs in Finland, where Microsoft kept Nokia’s former design and manufacturing teams, along with another 600, globally. Meanwhile, the $950 million impairment and restructuring charge will need to be paid in the fourth quarter. The business segment, which Microsoft acquired from Nokia for $7.2 billion in 2014, previously faced a write down of $7.6 billion along with 7,800 staff layoffs.

“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” said Satya Nadella, Microsoft chief executive.

The company would continue to “develop great new devices,” Terry Myerson, executive vice-president of Microsoft’s Windows and Devices Group, told employees, adding that it was “scaling back, but […] not out”.

Prior to the announced writedown, Microsoft agreed to sell the feature phone business for $350 million to Foxconn, where about 4,500 employees will be transferred from Microsoft.

This announcement follows the news that Nokia is planning another jobs cull as part of its global redundancy programme which could result in the loss of up to 15,000 jobs.

Image Credit: Radu Bercan / Shutterstock