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May 26, 2016

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Microsoft to cut 1,850 jobs as smartphone business falters

MICROSOFT Corp yesterday announced more big cuts to its smartphone business, just two years after it bought handset maker Nokia in an ill-fated attempt to take on market leaders Apple and Samsung.

The United States company said it would shed up to 1,850 jobs, most of them in Finland, and write down US$950 million from the business. It did not say how many employees currently work on smartphones in the group as a whole.

A Finnish union representative said the cuts would essentially put an end to Microsoft’s development of new phones.

“My understanding is that Windows 10 will go on as an operating system, but there will be no more phones made,” said Kalle Kiili, a shop steward.

Microsoft said in a statement that it would continue to develop the Windows 10 platform and support its Lumia smartphones, but gave no comment on whether it would develop new Windows phones.

Microsoft bought Nokia’s handset business for about US$7.2 billion in 2014, but failed to turn the business around and last year announced US$7.5 billion of writedowns and 7,800 job cuts.

The global market share of Windows smartphones fell below 1 percent in the first quarter of this year, according to research firm Gartner.

This month, Microsoft sold its entry-level feature phones business for US$350 million.

The company said yesterday that it expected to cut all 1,350 jobs at its Finnish mobile phone unit and close down a research and development site in the country. A further 500 jobs will go in other countries, it said.

“We are focusing our phone efforts where we have differentiation,” said Chief Executive Satya Nadella in a statement.

“We will continue to innovate across devices and on our cloud services.”

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