Satya Nadella, Microsoft’s current CEO recently sent out a bulk email to Microsoft employees to inform them of some rather unfortunate “business restructuring”. In it Nadella says that Microsoft is shedding 7 800 jobs from its mobile arm and taking a substantial financial hit
The cause of al this stems from Windows Phones and Microsoft’s purchase of Nokia’s mobile phone division . The purchase cost the company $7.2 billion (then around eighty billion rand). In addition, thirty-two thousand employees transferred from Nokia to Microsoft.
This has not panned out well, though. In around eighteen months the Window Phone seemed to be haemorrhaging money, as well as failing to gain a significant number of users. This seemingly terrible business decision was made by Steve Ballmer, Microsoft’s previous CEO, and now it seems Nadella wants to undo his predecessor’s mistake.
Nadella explains that the company will take a $7.6 billion “impairment charge”; this means that the entire amount is being written off as a loss. If that amount wasn’t big enough, an additional charge of “approximately $750 million to $850 million” is also incurred as part of a restructuring cost. All told, that is upwards of R100 billion. Quite the hit indeed.
The effects of this will unfortunately trickle down to Microsoft employees, as “[there will be a] reduction of up to 7 800 positions globally, primarily in [the] phone business”. We assume “reduction” means the employees will retrenched.
We’ve tried to contact Microsoft South Africa to find out how much, if any, impact this will have on the local scene, especially with the company’s official presence in our country. We have not heard from them at the time of writing. There is also no news as to how this will affect Nokia’s plans to start making phones again in 2016.
[Source – Microsoft News]