Microsoft are letting 7,800 employees go in their second biggest layoff in the company’s history. This is due to a restructuring which comes about after the £4.5bn purchase of Nokia’s mobile phone business last year. Microsoft have subsequently incurred a £7.6bn impairment adjustment in order to write down the value of their mobile phone business.
As of spring this year, the company currently employs around 118,000 people worldwide but are set to lose 7,800 as part of this restructure with 2,300 of these jobs being in Finland where Nokia is based. Microsoft’s press release claims that this restructuring will focus and align resources and follows recent moves to better align with company priorities.
While nearly 7% of Microsoft’s entire workforce is set to be cut, this isn’t even the deepest cut in the company’s 40 year history. This is because this week’s announcement comes almost exactly a year since Microsoft eliminated 18,000 jobs, with around 12,500 of these jobs also being in the company’s mobile phone unit and linked to the acquisition of Nokia back in April 2014.
A possible reason for these cuts is that Microsoft’s Windows is expected to seize only 3.2% of the global smartphone market this year, which may be understandable considering how the market is dominated by Apple’s iOS and Google’s Android system.
However, Microsoft’s purchase of Nokia is still in its early days and there is much potential for growth, especially considering how the Company as been at the helm of the personal computer market for many years. The Windows 10 system is also set to be rolled out later this month, which operates both on personal computers and mobile devices, and could provide a much needed boost for the company.
A watchful eye will have to be kept on Microsoft in July next year to see whether this is the start of a grim tradition for Microsoft’s employees or to see if the company is able to build the momentum that it needs to break into the mobile phone market.
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