Date
18 October 2017
Satya Nadella is cleaning up his predecessor's mess, one analyst says. Photo: Bloomberg
Satya Nadella is cleaning up his predecessor's mess, one analyst says. Photo: Bloomberg

Microsoft writes off Nokia, eyes massive job cuts

When Microsoft Corp. announced its deal to acquire Nokia Corp.’s mobile phone business, Steven Ballmer, the US tech giant’s chief executive at the time, boasted the deal was a “bold step into the future”.

But Microsoft’s current chief executive, Satya Nadella, sought Wednesday to leave that deal in the past, The New York Times reported.

He announced a broad rethinking of the firm’s strategy, a change that includes cutting up to 7,800 jobs, mostly from the phone business, and writing off nearly all the value of its Nokia acquisition.

The move is a clear acknowledgment the deal was a multibillion-dollar strategic blunder by Ballmer, who had envisioned it as a way to make Microsoft more competitive in the mobile market dominated by Apple Inc., Google Inc. and Samsung Electronics Co. Ltd.

“It’s a headache that Nadella inherited,” the report quoted Daniel Ives, an analyst at FBR Capital Markets, as saying.

“It is really cleaning up Ballmer’s mess.”

The job cuts amount to more than 6 percent of Microsoft’s global work force.

Combined with 18,000 job cuts last year, most of them also related to the Nokia acquisition, Microsoft will end up letting go a majority of workers who joined the company as a result of the deal.

Microsoft said it would take a US$7.6 billion accounting charge related to its acquisition of Nokia’s handset operations.

It completed its acquisition of Nokia last year for US$9.5 billion, though Nokia came with about US$1.5 billion of cash as part of the deal.

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