Home > Uncategorized > Microsoft to Cut Up to 7,800 Jobs, Mostly in Its Phone Unit

Microsoft to Cut Up to 7,800 Jobs, Mostly in Its Phone Unit

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Satya Nadella, Microsoft’s chief executive, told employees last month that the company needed to “make some tough choices in areas where things are not working.” CreditStephen Lam/Getty Images

The company also said it would take a $7.6 billion accounting charge related to its acquisition of Nokia’s handset operations, a clear acknowledgment thatMicrosoft’s foray into the mobile hardware business had borne little fruit.

While Microsoft will not stop making smartphones, the company’s chief executive, Satya Nadella, said on Wednesday that it would no longer focus on the growth of its own smartphone business but would instead emphasize the expansion of the broad “ecosystem” of products, including mobile phones, that ran its Windows software.

“I am committed to our first-party devices, including phones,” Mr. Nadella said in an email to Microsoft employees. “However, we need to focus our phone efforts in the near term while driving reinvention.”

The company’s retrenchment in smartphones comes as Mr. Nadella, who became chief executive last year, has been pulling Microsoft back from initiatives outside its core mission.

Rather than catering to all smartphone shoppers, Microsoft said it would narrow its focus to three types of customers: business users who want strong management, security and productivity apps;, buyers at the low end of the market looking for inexpensive phones; and Windows fans.

Last year, Microsoft laid off 18,000 employees, many of them who were also working in the company’s newly acquired smartphone business. The 7,800 cuts announced on Wednesday, which come mainly from smartphones, are in addition to those 18,000. The majority of the latest layoffs will be outside Microsoft’s home base in the Seattle area, including some in Finland, where Nokia originated.

At the end of March, Microsoft had more than 118,000 employees globally.

Microsoft executives have been hinting at more cutbacks for months. Mr. Nadella sent a companywide email in late June intended to rally employees for the coming year. But he also warned in the message that Microsoft would need to “make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value.”

In June, Microsoft said it was selling its online display advertising business to AOL, as the company exited a business for which it once had high hopes. In 2012, Microsoft signaled how its ambitions in the area had sputtered when it took a $6.2 billion accounting charge related to its acquisition of aQuantive, an online advertising company.

Microsoft has continued to lose market share in smartphones since acquiring Nokia’s handset business in 2014. The company has failed to turn the Windows Phone operating system, which runs on its handsets, into a vibrant alternative to the two leading mobile platforms, iOS from Apple and Android from Google.

Last month, the company said that Stephen Elop, the former chief executive of Nokia who became a senior Microsoft executive after the acquisition, overseeing its devices business, would leave Microsoft.

Microsoft said it would take the $7.6 billion charge during its fourth fiscal quarter, which ended June 30, and that it would be a noncash charge reflecting the declining performance of the smartphone business, which continued to lose money and market share. Microsoft said it would also take a cash restructuring charge of between $750 million and $850 million related to the layoffs.

Correction: July 8, 2015
An earlier version of this article misstated the day when Satya Nadella, the chief executive of Microsoft, said that the company would no longer focus on the growth of its own smartphone business. He spoke on Wednesday, not Monday.NY Times
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