TORONTO – Software giant Microsoft is cutting up to 7,800 positions, primarily in the phone business.
The company announced the layoffs Wednesday and announced it is writing off US$7.6 billion related to its acquisition of the Nokia phone business. That’s more than the US$7.2 billion Microsoft paid for Nokia’s phone business last year.
Microsoft ultimately wanted to build an ecosystem that created customers that were loyal to a slew of its products, much as Apple and Google have done so successfully. But Microsoft’s Windows Phone system has gained little traction against Apple’s iPhone and Google’s Android system.
“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,” CEO Satya Nadella said in a press release.
“In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
The Nokia deal was made under Nadella’s predecessor Steve Ballmer, who wanted Microsoft to make its own smartphones and tablets. But Nadella has been moving away from this strategy in order to focus on the company’s core software business and related services.
Last July, Microsoft announced it was cutting up to 18,000 jobs – about 14 per cent of its staff – as it works to cut down on management layers and integrate the Nokia devices business it bought in April. Those job cuts saw layoffs of about 12,500 professional and factory jobs.
On Wednesday, the New York Times reported the company was gearing up to layoff employees working in the company’s hardware division. According to the report, Nadella may have warned of the cuts in a company-wide email sent in June. He reportedly warned the company would need to “make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value.”
Meanwhile, Microsoft is gearing up for the release of the new edition of its flagship operating system, Windows 10, on July 29.
Microsoft said it would reveal more information about the changes during its fourth-quarter earnings call on July 21.
– With files from The Associated Press
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