Microsoft (NASDAQ: MSFT) announced it will cut up to 1,350 jobs in Finland and up to 500 jobs globally as part of its further withdrawal from the smartphone business. The company said it would record an impairment and restructuring charge of around $950 million related to the move, of which it said $200 million would 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," Satya Nadella, Microsoft's CEO, said in a short release from the company announcing the news. "We will continue to innovate across devices and on our cloud services across all mobile platforms."
Recode reported that Microsoft's Windows and Devices chief, Terry Myerson, wrote in a memo to employees that "we're scaling back, but we're not out!"
"When I look back on our journey in mobility, we've done hard work and had great ideas, but have not always had the alignment needed across the company to make an impact," Myerson wrote, adding that Microsoft will continue to focus on making universal apps that run across a variety of devices, and that it will continue to support its existing Lumia phones.
"We remain steadfast in our pursuit of innovation across our Windows devices and our services to create new and delightful experiences. Our best work for customers comes from our device, platform, and service combination," Myerson wrote.
Microsoft's announcement comes days after the company said it will sell its feature-phone business to a Foxconn subsidiary in a $350 million deal that will also see Nokia return to the mobile-devices business it once dominated. Microsoft is selling "substantially all of its feature phone assets" to FIH Mobile Ltd., which is owned by the Taiwan-based electronics giant Foxconn, and to a HMD Global Oy, a newly founded Finnish corporation. Roughly 4,500 Microsoft employees will have the opportunity to transfer to FIH, and the agreement includes Microsoft's manufacturing plant in Vietnam.
Microsoft's announcement today appears to put the final nail in the coffin on the company's failed acquisition of Nokia's smartphone business -- and it also appears to signal Microsoft's retreat from a space that it initially entered in 2002 with the Orange SPV Windows-powered smartphone in Europe built by HTC. Microsoft's adventures in the smartphone business over the years have spanned hundreds of devices from a wide range of companies including HTC, Samsung and Microsoft itself (Lumia, Kin and others), as well as a handful of distinct operating systems including Windows CE, Windows Mobile, Windows Phone and, most recently, Windows 10.
Microsoft's announcement today also isn't much of a surprise: Microsoft's mobile business suffered through a brutal first quarter as the company sold only 2.3 million Lumia handsets, down from 8.6 million during the prior year. That marks a 73 percent plunge in Lumia sales year-over-year and follows the 57 percent drop Microsoft endured during the final quarter of 2015.
Microsoft launched two flagship Lumia devices toward the end of last year, both of which clearly have failed to gain any traction.
And Microsoft's mobile operating system is becoming increasingly irrelevant. Kantar WorldPanel reported earlier this month that Windows ran on a tiny 2.6 percent of smartphones sold in the U.S. during the three-month period ending in February, down from 4.8 percent the previous year.
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