More job cuts rumoured at Microsoft

July 8, 2015 | 11:57

Tags: #financial #job-cuts #job-losses #rumour

Companies: #microsoft

Microsoft is reportedly to announce a swathe of additional job losses later today, as the company seeks to bolster its bottom line.

According to a report in the New York Times and as-yet unconfirmed by Microsoft itself, the company is to announce job losses centring around its hardware group and the mobile division it acquired from Nokia last year. Although the anonymous sources did not provide firm figures, the paper has described the cuts as 'major' and suggests that they are in addition to the 18,000 job losses announced by the company last year.

The job cuts come as the company prepares to launch Windows 10, its latest mainstream operating system and what promises to the first in a new rolling release cycle which mimics that of its rivals OS X and Linux. It also comes, however, as the company admitted to a five per cent drop in operating income and poor performance from its Xbox division following lower-than-expected sales of the Xbox One and the resulting price cuts.

Microsoft's mobile division, too, is a poor performer: sales of the Lumia family handsets acquired from Nokia in a $7.2 billion deal last year have failed to make an impact against rival iOS and Android devices, while Windows Phone itself has struggled to find licensees. Stephen Elop, who left Microsoft to become chief executive of Nokia only to return when the Finnish company was purchased, left the company last month.

Microsoft has refused to comment on the claims, but if the sources prove accurate will make the announcement later today or tomorrow. This is expected by analysts to be followed with a write-down of its Nokia acquisition to the tune of several billion dollars, which will put a severe hole in the company's bottom line as it heads into the Windows 10 era.

Microsoft has confirmed the rumour, stating that it is to cut 7,800 additional positions and write off $7.6 billion relating to assets acquired from Nokia, on top of a $750 million to $850 million restructuring charge.

'We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family,' Microsoft chief Satya Nadella claimed in the statement. 'In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.'
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