During a call with Wall Street analysts to discuss Microsoft's Q3 FY 2015 earnings results, CEO Satya Nadella noted that even though Lumia phone sales were up 18 percent in volume for the quarter, the company plans more cost cuts in its first-party hardware. No one from Microsoft would elaborate on exactly what kinds of cuts would happen, which Microsoft devices would be affected, or when these actions might occur.
"Declines in expected future cash flows, reduction in future unit volume growth rates, or an increase in the risk-adjusted discount rate used to estimate the fair value of the Phone Hardware reporting unit may result in a determination that an impairment adjustment is required, resulting in a potentially material charge to earnings," according to the 10-Q.
A Microsoft spokesperson said today that the company had nothing to say on the matter beyond what it revealed in the SEC filing.
There have been reports that quite a few members of Microsoft's senior leadership team -- including then-President of Cloud & Enterprise Satya Nadella -- were not in favor of former CEO Steve Ballmer's decision to buy Nokia's handset business. Since that acquisition, and Nadella's elevation to CEO, Microsoft officials have been de-emphasizing Microsoft's role as a hardware maker and a refocusing of the company's business around its software and services businesses.
Microsoft is in the midst of trying to grow its Windows Phone share by making the underlying Windows Phone OS free to phone manufacturers, as well as by rolling out more low- and mid-range Windows Phone devices, rather than focusing more on higher-end, lower-volume devices.