Date
20 January 2017
The cuts would essentially put an end to Microsoft's development of new phones, says a union representative. Photo: Bloomberg
The cuts would essentially put an end to Microsoft's development of new phones, says a union representative. Photo: Bloomberg

Microsoft to cut 1,850 jobs at struggling smartphone unit

Microsoft Corp. will shed up to 1,850 jobs and write down US$950 million from its smartphone business, the company announced on Wednesday.

The cuts came just two years after it bought handset maker Nokia in an ill-fated attempt to take on market leaders Apple Inc. and Samsung Electronics Co. Ltd., Reuters reports.

Most of the job cuts will be in Finland, but Microsoft did not say how many employees currently work on smartphones in the group as a whole, the report said.

Shares of Microsoft were flat late on Wednesday, but significantly up from US$34.20 when Satya Nadella became chief executive in February 2014.

Remaking Microsoft, known primarily for its software, into a more device-focused company was a hallmark of previous CEO Steve Ballmer.

In one of his last major acts, Ballmer closed a deal to buy Nokia’s struggling but once-dominant handset business for about US$7.2 billion in late 2013.

The deal closed in April 2014, two months after Nadella became chief executive.

Since then, Nadella has shaved away at the phone business, starting with a 2015 restructuring that put the devices group, previously a stand-alone unit under former Nokia chief Stephen Elop, under the Windows group.

Run by Terry Myerson, the Windows division is the company’s biggest.

A Finnish union representative told Reuters 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 by Microsoft,” said Kalle Kiili, a shop steward.

Microsoft said in a statement 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.

Global market share of Windows smartphones fell below 1 percent in the first quarter of 2016, according to research firm Gartner.

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