Microsoft also is taking a $7.6 billion write-down related to its Nokia acquisition, plus a restructuring charge of between $750 million to $850 million. Microsoft plans to complete the job cuts largely by the end of calendar 2015 and completely by the end of fiscal 2016, which means June 30, 2016.
Despite that fact, the company is not throwing in the towel on Windows Phone, one of a handful of first-party devices the company makes. (Other Microsoft-made/branded hardware include the Surface tablet line and Surface Hub conferencing system; Xbox gaming console; Microsoft fitness Band; and the coming HoloLens augmented-reality headset.)
Microsoft still plans to make Lumia phones and is pushing ahead with Windows 10 Mobile, its operating system for Windows Phones and small tablets, expected to hit later this year. Microsoft still plans to launch Lumia flagship devices this calendar year. (The rumor is this fall, once Windows 10 Mobile is available.)
Microsoft will focus its phone efforts on three segments: Businesses, value-phone buyers and flagship phone customers, moving forward.
I'm not sure if Microsoft will continue making its own phones or outsource its manufacturing completely, while still branding its phones as "Microsoft"-made. Right now, Microsoft makes some phones and outsources some of its phone manufacturing. A spokesperson said the company had no comment as to whether or when it would move to an outsource-only model.
Microsoft's move to cut jobs in hardware isn't much of a surprise. During last quarter's earnings call, Nadella told Wall Street analysts that Microsoft needed "to take further action to reduce our costs across devices as we execute on our Windows 10 first-party hardware plans."
Last year, Microsoft cut 18,000 jobs over a series of multiple waves. The biggest group affected by last year's cuts -- 12,500 employees -- were former Nokia employees that Microsoft acquired when it bought Nokia's handset and services business.But a number of other groups at the company were affected by last year's cuts, too, including Microsoft's Operating Systems Group, Microsoft Research, human resources, finance, sales and marketing and IT.