Microsoft's foray into smartphone business has proven to be a very expensive one as the Redmond Washington-based company on Wednesday announced plans to disengage 1,850 employees.
The restructure will cost approximately $950 million, with around $200 million expected to be dished out in the form of severance payments.
Nadella, who initially opposed Ballmer's move into the handset business, hasn't publicly declared a full retreat, saying in a statement that the company "will continue to innovate across devices".
The company anticipates that there will be 1,350 job cuts at Microsoft Mobile Oy in Finland and an additional 500 jobs globally, a press release reads.
Microsoft says that most of the restructuring should be completed by the end of the calendar year, and fully completed by the end of its fiscal year in July 2017, with more details on the plans disclosed in its next financial report in July. That's a decrease from the 2.5 percent market share of Windows Phone during the first quarter of 2015, according to the US-based analyst group, Gartner Inc.
Microsoft, under former CEO Steve Ballmer, attempted to leverage its software knowhow to take on increasingly powerful tech rivals, but the company has beat a quick retreat under new CEO Satya Nadella, with the venture taking on water.
Shares of Microsoft were trading higher by 0.76 percent following the announcement early Wednesday morning.
Nearly a year ago, Nadella had announced a "more effective and focused phone portfolio" with business, value phones and flagships gaining prominance.
To the sorrow of everybody involved, it didn't pay off. This latest round of layoffs - Microsoft also culled 7800 staff in July previous year - must surely be the final nail in the coffin.
For many observers, this won't come as a surprise considering the downturn being experienced in the sales of the company's smartphones.
Just last week we had reported that Microsoft has sold its feature phone business, including the Nokia trademark usage rights to two corporations in the homeland of Nokia, Finland for a meager sum of $350 million. This also coincided with the news of a possible Nokia comeback - this time with smartphones running Android. With all the right ingredients in place - design, features, OS and above all, brand value, there is no reason why Nokia could once again, end up being a force to be reckoned with in the smartphones space.
Source: Microsoft Streamlines Its Smartphone Business Again, Lays Off 1850 People
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