Microsoft announces 7,800 layoffs and will write down $7.6 billion from Nokia

Nadella is redesigning Microsoft.
Nadella is redesigning Microsoft.
Image: Microsoft
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This post had been updated.

Microsoft announced today it would cut up to 7,800 positions, primarily from its Nokia mobile phone business, and will write down $7.6 billion related to its purchase of Nokia. Microsoft’s 2013 acquisition of Nokia—one of former CEO Steve Ballmer’s last big plays—increasingly looks like a mistake.

The moves come as Microsoft CEO Satya Nadella continues to try to reshape Microsoft for the current realities of the technology industry. Microsoft is still quite profitable, but its legacy business model of licensing software—primarily its Windows operating system and Office software—is outdated. And if you subtract Nokia’s business from Microsoft’s published results, revenue is no longer growing.

“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,” Nadella said today in an email to employees. “In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

About a year ago, Nadella outlined plans to become a “productivity and platform company for the mobile-first and cloud-first world.” This includes increasing bets on cloud-based software sold as a subscription service, and trimming jobs and products in underperforming areas.

Last year, Microsoft announced a huge round of 18,000 layoffs, or about 14% of its footprint. More recently, it announced a plan to shed its online advertising business to AOL, which reportedly includes transferring 1,200 employees. It is also planning to release its new Windows 10 operating system soon, and is developing new platforms for the future, such as its HoloLens augmented-reality software.

The New York Times first reported Microsoft’s plans to cut jobs.