Microsoft’s streamlining of its smartphone business continued this week when it announced it has written off a further $950 million and 1,850 jobs, effectively signalling the end of its failed Nokia experiment. It follows last week’s news that it would sell its feature phone business to FIH Mobile, a subsidiary of Foxconn, for $350 million.
Microsoft acquired Nokia in 2014 for $7.2 billion in an attempt to strengthen its presence in the smartphone market. However, the strategy hasn’t worked and resulted in Microsoft writing off $7.6 billion and cutting 7,800 jobs last year. The most recent cuts mean that the majority of Nokia staff are no longer employed by Microsoft, with around $200 million of the write off relating to employee 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,” said the company statement.