Microsoft to cut 1,850 jobs at struggling smartphone unit

Wed May 25, 2016 6:56pm EDT
 
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By Jussi Rosendahl and Tuomas Forsell

HELSINKI/SAN FRANCISCO (Reuters) - Microsoft Corp MSFT.O announced more big cuts to its smartphone business on Wednesday, just two years after it bought handset maker Nokia in an ill-fated attempt to take on market leaders Apple Inc (AAPL.O: Quote) and Samsung Electronics Co Ltd (005930.KS: Quote).

In a move that clearly puts the stamp of two-year chief executive Satya Nadella on the U.S. company, Microsoft said it would shed up to 1,850 jobs, most of them in Finland, and write down $950 million from the business. It did not say how many employees currently work on smartphones in the group as a whole.

Shares of Microsoft were trading around $52 late Wednesday, roughly flat with their $51.59 close Tuesday, but significantly up from $34.20 when Nadella became CEO in February 2014.

Remaking Microsoft, known primarily for its software, into a more device-focused company was a hallmark of previous chief executive Steve Ballmer.

In one of his last major acts, Ballmer closed a deal to buy Nokia's (NOKIA.HE: Quote) struggling but once-dominant handset business for about $7.2 billion in late 2013. The deal closed in April 2014, two months after Nadella became CEO.

Since then, Nadella has shaved away at the phone business, starting with a 2015 restructuring that put the devices group, previously a stand-alone unit under former Nokia chief Stephen Elop, under the Windows group. Run by Terry Myerson, the Windows division is the company's biggest.

A Finnish union representative told Reuters the cuts would essentially put an end to Microsoft's development of new phones.

"My understanding is that Windows 10 will go on as an operating system, but there will be no more phones made by Microsoft," said Kalle Kiili, a shop steward.   Continued...

 
A shadow of a man using his mobile phone is cast near Microsoft logo at the 2014 Computex exhibition in Taipei June 4, 2014. REUTERS/Pichi Chuang