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Microsoft To Cut 7,800 More Jobs, Take $7.6 Billion Writedown On Nokia

Posted by Soulskill on from the trimming-huge-amounts-of-fat dept.

jones_supa writes: Microsoft is about to announce another round of layoffs. A company press release confirms the plan, saying that it will target up to 7,800 employees and will be aimed mostly at the hardware division. The hardware division includes the lion's share of former Nokia employees, which became part of Microsoft last year. In an e-mail to employees, chief executive officer Satya Nadella reiterated the company's commitment to its phone business, though he also said that some refocusing was necessary and that Microsoft's phone business would reflect the overall Windows strategy: "We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family," the e-mail reads. "As a result, the company will take an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services business in addition to a restructuring charge of approximately $750 million to $850 million."

8 of 249 comments (clear)

  1. Wait a minute... by mrspoonsi · · Score: 5, Insightful

    Didn't MS buy Nokia for $7B, and they write off $7.6B, so they are pretty much writing off the whole Nokia as worthless.

    1. Re:Wait a minute... by faway · · Score: 5, Funny

      truth be told, many consumers did that years ago. as usual it has taken Microsoft forever to catch up with consumers.

    2. Re:Wait a minute... by McGruber · · Score: 5, Insightful

      Embrace, Extend, Extinguish.

      Buh-bye, Nokia.

  2. Wow ... by gstoddart · · Score: 5, Insightful

    So, basically Microsoft successfully killed the actual Nokia, successfully transferred the IP to themselves, have completely screwed the pooch in terms of being able to manage an acquisition which never made any sense ... and now they've written off the purchase.

    I'm sorry, but if you're taking over $7 billion in writedowns, maybe the decision to but it in the first place was stupid and misguided?

    This just sounds like Microsoft pissed away billions trying to prop up their failing phone, and are now leaving the rotting carcass of Nokia in their wake.

    Is this anything but mismanagement and hubris? Because it sounds like other than fucking up Nokia it hasn't achieved a damned thing.

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    1. Re:Wow ... by ShanghaiBill · · Score: 5, Interesting

      ... an acquisition which never made any sense

      Apple makes an iPhone for about $200, and sells it for about $600, for a gross profit of about $400 per phone.

      Google makes no money directly from Android software, and the Android handset makers make a tiny fraction of what Apple makes.

      There are HUGE advantages to controlling the entire HW/SW platform. Just because Microsoft screwed it up, doesn't mean it wasn't a good idea. The concept made a lot of sense, but the execution was mismanaged.

    2. Re:Wow ... by fwarren · · Score: 5, Interesting

      Back in 2011 when Elop wrote the burning memo the handwriting was on the wall. Nokia was going to have trouble in the smart phone market. There is no way of knowing if their Linux offering that Elop canned to go with WinMo would have worked out for them. What was obvious even back then, was that moving to WinMo was a mistake. MS had gone from 12% of the smart phone market to under 4% by that point. No one was clamoring for new Windows 7.5 phone. Every Windows 6 phone user I knew had left for Apple or Google by that point in time, fed up random reboots on their phone that took 2 minutes to complete.

      It did not help that at that point most of his wealth was invested in Microsoft stock and only a small amount in Nokia stock. It was in his best interest to try and save the Widnows phone. Elop had drank to much kool-aid and was convinced that anything Microsoft was the way to go and coupled with that financial interest he took Nokia in the wrong direction.

      The only thing dumber than Elop tanking Nokia was Microsoft purchasing Nokia.

      I take that back. Microsoft purchasing Skype was just as dumb. After spending over 9 billion on Skype and then having to upgrade the hardware infrastructure Skype runs on. I suspect Microsoft has another 10 billion or so it will need to write off.

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    3. Re:Wow ... by tlhIngan · · Score: 5, Informative

      So, basically Microsoft successfully killed the actual Nokia, successfully transferred the IP to themselves, have completely screwed the pooch in terms of being able to manage an acquisition which never made any sense ... and now they've written off the purchase.

      Nokia is still around, they've just reverted back to their core business - selling telephony equipment.

      Nokia's well known for their handsets, but handset business is awful, due to its consumer nature. It's low profit, mass production, with lots of time wasted on stuff like warranty and support.

      Microsoft bought that business.

      Nokia's core business of selling equipment used to run cell networks is still around - Microsoft didn't buy that, and the core is honestly where the money's at. Think whenever a carrier goes and sets up a new cell tower all the equipment they need to buy - controllers, baseband processors, amplifiers, exciters, receivers, antennas, etc. all costing 6 figures minimum. And one set for the bands in question, another set for 2G, 3G and 4G, ... and you're talking millions of dollars of hardware, the BOM cost of which is probably well under $100k.

      And with 5G on the horizon, that's more opportunity.

      The real Nokia is still around, and they've shed the crappy parts of their business.

  3. Also gone is Elop by UnknowingFool · · Score: 5, Insightful

    Apparently Elop is also out as part of the layoffs. Most likely he'll get a big payout for his part.

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