Microsoft 'Streamlines' Its Smartphone Business, Cutting 1850 Jobs, Recording $950 Million Loss

Microsoft has announced plans to 'streamline' its smartphone hardware business, a change that will impact up to 1850 jobs and see the company record an impairment and restructuring charge of approximately $950 million, of which approximately $200 million will relate to severance payments.

"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, chief executive officer of Microsoft. "We will continue to innovate across devices and on our cloud services across all mobile platforms."

Microsoft anticipates this will result in the reduction of up to 1,350 jobs at Microsoft Mobile Oy in Finland, as well as up to 500 additional jobs globally. Employees working for Microsoft Oy, a separate Microsoft sales subsidiary based in Espoo, are not in scope for the planned reductions.


As a result of the action, Microsoft will record a charge in the fourth quarter of fiscal 2016 for the impairment of assets in its More Personal Computing segment, related to these phone decisions.

The actions associated with today's announcement are expected to be substantially complete by the end of the calendar year and fully completed by July 2017, the end of the company's next fiscal year.

Just one week ago, the company announced that it was selling Nokia's feature phone business to Foxconn and HMD for $350 million. Following last year's write off of $7.6 billion and slashing of 7,800 jobs, today's announcement is basically the tragic end to Microsoft's acquisition of Nokia.

The only glimmer of hope for Microsoft in mobile hardware appears to be the long rumored Surface branded smartphone; however, given its track record thus far, the company will have a challenging road ahead.