Microsoft cuts another 1,850 jobs, takes $950 million charge in its phone hardware business

Microsoft is continuing its pull-back from the phone hardware business with more job cuts. But it's still not hoisting the white flag and completely giving up on the mobile-phone business.
Written by Mary Jo Foley, Senior Contributing Editor

Microsoft is cutting another 1,850 jobs connected to its mobile-phone business, on the heels of the 4,500 job cuts connected with its sell-off of its feature-phone business a week ago.


The latest cuts impact primarily employees in Finland working on Microsoft's Lumia phone business. Of the current 1,850 cuts, 1,350 of those affected are in Finland, according to Microsoft's May 25 announcement.

Microsoft also is taking a $950 million impairment and restructuring charge as part of today's announcement, with about $200 million of that total attributable to severance payments.

Most of the cuts announced today will happen before the end of Microsoft's calendar 2016; the rest will be done by July 2017, officials said today.

So that's it for Microsoft's plans for any future phone hardware? Believe it or not, the answer is no.

According to an email sent on March 26 to all employees, Windows and Devices chief Terry Myerson said Microsoft's phone business, moving forward, will be "more focused" and targeting companies that are most interested in security, manageability and Continuum.

Today's announcement is part of Microsoft's previously announced strategy to try to gain inroads with customers in the business phone segment.

Last July, CEO Satya Nadella said Microsoft would reduce the number of Windows Phones it would make and sharpen its sights on fans, business customers and value-sensitive users. In recent months, Microsoft introduced the Lumia 650 as its newest business phone. The Lumia 550 was its latest value phone and the Lumia 950/950 XL its phone models for fan/flagship customers.

As far as I've heard from my sources, in spite of today's news, Microsoft still plans to introduce new small mobile devices in the spring of 2017.

In a May 25 email to all employees, Myerson said: "We will continue to update and support our current Lumia and OEM partner phones, and develop great new devices." Myerson added "We're scaling back, but we're not out!" in regards to Microsoft's plans for phone hardware.

"At the same time, our company will be pragmatic and embrace other mobile platforms with our productivity services, device management services, and development tools -- regardless of a person's phone choice, we want everyone to be able to experience what Microsoft has to offer them," Myerson said in that same email.

Microsoft has continued to lose money on its phone hardware business over the past several years. Company execs have warned that Microsoft's already dwindling market share in mobile phones (currently under one percent worldwide) would dip further in the coming months as Microsoft attempts to regroup and stem its phone-hardware losses.

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