The job cuts will be accompanied by a $7.6 billion write-down related to the acquisition of Nokia.
Microsoft CEO Satya Nadella previously warned of “tough choices in areas where things are not working,” and it seems that those employed in the Windows Phone hardware business are taking a hit.
Nadella announces plans in email to employees
“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,” wrote Nadella in an email to employees. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”
The majority of job cuts will be made by the end of calendar 2015, and the process will be completed by June 30, 2016, the end of the fiscal year. There will also be a restructuring charge of between $750 and $850 million in addition to the $7.6 billion write-down.
Microsoft will continue to work on the Windows Phone, although it appears that a large family of smartphones is not a priority for the company. Lumia handsets will still be produced, and Microsoft continues to work on Windows 10 Mobile, the smartphone and tablet operating system which is expected to be released this year.
Cost-cutting measures continue at Microsoft
Job cuts at Microsoft do not come as a big surprise. Nadella admitted that Microsoft had “to take further action to reduce our costs across devices as we execute on our Windows 10 first-party hardware plans” during last quarter’s earnings call.
Predictions of a major shake up in the company’s handset division gained further traction following a 10-Q filing in April which contained serious warnings about the Nokia handset business.
In June, Nadella appointed Executive Vice President Terry Myerson as head of a new group, ending the tenure of former hardware/devices chief Stephen Elop.
Nadella last week ended Microsoft’s involvement in the display advertising business and sold its Bing Maps data-collection assets to Uber, shedding another 1,000 jobs. This latest round of job cuts comes in addition to the 18,000 positions which Microsoft shed over the course of last year, the majority of whom were former Nokia employees.