Barely a year after Microsoft CEO Satya Nadella laid-off people from 18,000 jobs, Microsoft is at it again! This time the company announced its plans to cut up to 7,800 jobs and write down $7.6 billion on its struggling Nokia and phone hardware business in a bid to restructure it.
An internal memo to employees from Nadella ran thus, “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. In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
The restructuring is expected to cost somewhere between $750 million to $850 million and will shift the focus from handset hardware to core software. The entire lay-off operations are expected to be completed by the end of the company’s fiscal year and with it, Microsoft hopes to shake off the doldrums and become a majority player in the smartphone market competing against the likes of Apple and Samsung.
The new announcement comes at a time when last year’s memo, where Nadella had said, “My promise to you is that we will go through this process in the most thoughtful and transparent way possible,” is still fresh in the minds of the employees. It is also a critical time for the company as it prepares to launch one of the biggest offerings in many years – Windows 10 – a multi-device operating system for upcoming Windows PCs and mobile devices.
Industry analysts are also speculating a shift towards cloud computing including Microsoft’s Office software suite, rather than a targeted mobile hardware strategy. According to FBR Capital Markets analyst Daniel Ives, “They’re going through a major sea change at Microsoft in terms of restructuring and strategic focus.”
What remains to be seen is how this restructuring and lay-off operations will affect the company’s operations and its market shares in general which were up more than 1% at $44.73 in morning trading.