After Microsoft let go of 18,000 employees last year, we’re surprised that history is repeating itself so soon.
Microsoft announced that it is now looking to layoff 7,800 more employees!
The reason behind this six percent decline in Microsoft’s workforce, has to do with the failure of the company’s phone-hardware business.
Well, failure may be too strong of a word. Microsoft acquired Nokia, the phone business, in 2014 and since then, the transaction has not paid off as well as Microsoft executives hoped it would. The Nokia handsets, which use the Windows operating system, was supposed to help Microsoft compete with Apple’s iOS and Google’s Android.
That did not work out for Microsoft. However, that doesn’t mean that the company’s finances are done for, it just means that it needs to do some reevaluating. So when you see the number $7.6 billion, do not fret.
A $7.6 billion impairment charge is required for its phone hardware department, meaning that $7.6 billion will be used to restructure the business and its various sectors after the layoffs.
Understandably, the majority of the employees who will be let go are from Microsoft’s not-so-successful phone business. The locations that will probably be severely affected are Seattle (Microsoft’s center), and Salo, Finland (Nokia’s hometown).
Even though Microsoft’s chief executive, Satya Nadella, warned of these potential layoffs a few weeks ago, many people are still distressed by the official announcement.
Nadella said that the company needs to concentrate more on what will “drive customer value,” by narrowing its focus to three kinds of smartphone consumers. These consumers include business managers who need security and productivity, the lower market that needs cheaper phones, and those who prefer the Windows operating system.
Microsoft will keep its sight on the short term for its current phone business while it is restructuring and reevaluating its goals. More information will become available by July 21, when Microsoft files its 10K.