Indian American CEO Satya Nadella-led Microsoft on Wednesday announced it was laying off 7,800 employees primarily in the phone business as part of a major overhaul aimed at focusing the company on its core businesses.
This is Nadella’s second major restructuring of Microsoft, a major employer of Indian IT professionals. It had 118,600 employees at the end of March, with about 60,000 of them in the US.
The new cuts represents about 7 percent of its workforce, compared to the 14 percent or 18,000 layoffs he announced last year in Nokia’s devices and services business, following Microsoft’s acquisition of the handset maker.
The new job cuts and restructuring will also mean a $7.6 billion writedown for the company, a one-time charge that many have been expecting, according to CNN.
Former Microsoft CEO Steve Ballmer’s 2013 purchase of Nokia was one of his most criticized deals with analysts suggesting Ballmer was hampering the company with an ageing legacy business.
While Microsoft will not stop making smartphones, Nadella on Monday said Microsoft would no longer focus on the growth of its own smartphone business.
“I am committed to our first-party devices, including phones,” Nadella said in an email to Microsoft employees. “However, we need to focus our phone efforts in the near term while driving reinvention.”
In late June too, Nadella warned of tough choices ahead, noted Fortune.
The fact that most of the cuts come from the company’s phone business is not a surprise, it said.
A Microsoft spokesman said the cuts were all about focusing the company on core businesses, which is why it just sold some of its mapping business and ad sales business to AOL.
“We want to concentrate on where we can add value,” he told Fortune.