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Microsoft writes off $950M of phone hardware business & cuts 1,850 jobs


Microsoft has cut 1,850 jobs in the smartphone hardware business as it plans to streamline the division, the company said in the blogpost. The restructuring will cost the company $950 million of which $200 million will be used for severance payments. The changes are expected to be completed by July 2017.

Microsoft, which had purchased Nokia’s devices and services business and licensed its patents for Euro 5.44 billion in September 2013, has been steadily writing off the purchase over the past couple of years. The company laid off 12,500 employees in July 2014, and another 7,800 in July 2015 when it also wrote off Nokia’s $7.5 billion phone hardware business and $780 million of restructuring expenses.

Earlier this month, Microsoft also sold off Nokia’s feature phone business to FIH Mobile, a subsidiary of Foxconn, for $350 million. At the time, 4,500 Nokia employees were provided with the option to join Foxconn. Including the current job cut, Microsoft has overall axed 22,150 Nokia employees and provided 4,500 with options to move to other companies. The company had initially inherited around 25,000 employees from Nokia.

Note that Microsoft’s phone business has been in a freefall, as the sales of its flagship Lumia phones were down by 73% this quarter compared to the same quarter last year. The company had sold only 2.3 million devices this quarter. Last month, Microsoft even started giving away Lumia 950 phones for free to boost adoption (not for Indian users). However, there is no clear indication that Microsoft will completely shutter Limia, and indicates that it will continue making flagship phones and tablets for now.

Financials: Microsoft reported a profit of $3.8 billion for the quarter ended March 31, 2016 (Q3 FY16), a 25% decline from $5 billion last year. The total revenues for the quarter stood at $20.5 billion, down 6% from $21.72 billion the corresponding quarter last year. The operating income of the company stood at $5.3 billion, a 20% decline from $6.6 billion last year.

Other developments:

– This month, Microsoft updated its content policies to remove content that promotes terrorist violence or recruitment for terrorist groups.

– In the same month, rural broadband player AirJaldi and education startup Zaya Learning Labs received Microsoft’s Affordable Access Initiative grants in India.

– Last week, Microsoft and SAP tied up to offer support for the SAP HANA platform (deployed on Microsoft Azure) to work on Microsoft Office 365 and cloud solutions from SAP.

– Last month, Microsoft was said to be in talks with carmaker Daimler AG to take a minority stake in its digital mapping service HERE.

Image source: Flickr user Michael Kappel under CC BY-NC 2.0

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