Despite what many people have said, the reconstruction of Microsoft is not over. Satya Nadella is still on his way to make Microsoft his own. Last years, we saw the massive 18,000 employees being layoff by the Redmond-based company. Today, in an email from the CEO of Microsoft, we learned that 7,800 more will be leaving the company, mostly in the mobile phone division.
Not to be confused with the already going on plans of releasing 18,000 employees from last year. These new layoff plans bring the total to 25,000 employees to be let go in two years. The company also reveals that they will have a record impairment charge of $7.6 billion because of the write-down from the merger with Nokia. Furthermore, the restructuring cost for the company might go up to $850 million:
“Microsoft will record a charge in the fourth quarter of fiscal 2015 for the impairment of assets and goodwill in its Phone Hardware segment, related to the NDS business. This charge has no impact on cash flow from operations and is nondeductible for income tax purposes. Based on the new plans, the future prospects for the Phone Hardware segment are below original expectations. Accordingly, the company concluded that an impairment adjustment of its Phone Hardware segment assets and goodwill of approximately $7.6 billion is required.”
This layoff is estimated to be a 7% reduction of its labor force; for the moment, the company has around 128,000 employees. Out of the 7,000, 2,300 will be from the Finland branch; more than half of branch’s workforce, which currently is 3,200.
Despite that, Satya Nadella promises that Microsoft is still committing to first-party hardware (Xbox, Surface, and Lumia series). This reduction might be the attempt to scale down the Nokia/Microsoft smartphone portfolio and allows its hardware partner to build the phones. Bloomberg has reported that in the future, the company will be releasing as much as six smartphones per year, less than any other hardware companies (besides Apple, of course):
“Nadella’s restructuring plan includes sharply reducing the number of models the company will release, now about one a week when counting variations for geographical markets, a person familiar with the plans said. Instead, Microsoft will release one to two models a year in each of three categories, said the person, who asked not to be named because the plans aren’t public. The categories are business-focused devices, phones for customers looking for low-price smartphones, and high-end devices for Windows enthusiasts.”
This statement confirms the highly-anticipated Cityman and Talkman that has been rumored for months, as well as proving that the company is buying Nokia to stay in the hardware business.