Skip to main content

Microsoft slashes 7,800 jobs from its phone business and writes off $7.6B in Nokia costs

Microsoft’s purchase of Nokia prompted some analysts to predict a turnaround for the embattled Finnish phone company, but it hasn’t turned out that way. Microsoft announced it would write down $7.6 billion in costs related to the acquisition and cut 7,800 jobs in the company’s phone business.

The news doesn’t come as much of a surprise. In a filing with the U.S. Securities and Exchange Commission (SEC) in April, Microsoft revealed that Lumia sales so far have disappointed. Development costs exceeded revenue by $4 million during the first quarter of 2015, a loss of about 12 cents per phone. “Given its recent performance, the Phone Hardware reporting unit is at an elevated risk of impairment,” warned Microsoft at the time.

Recommended Videos

“Microsoft devices will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly.”

The new round of writeoffs and layoffs come in addition to the $750 – $850 million restructuring change Microsoft says it’ll take next in the fourth quarter and the 18,000 employees it let go last year. It’s the latest move in a series of drastic management decisions aimed at propping up Nokia’s poor performance.

Former Nokia CEO Stephen Elop and Microsoft’s head of phones Jo Harlow departed as part of a reorganization last month, a move Microsoft CEO Satya Nadella said would “enable [the company] to deliver better products and services that our customers love at a more rapid pace.” Nadella also denies that Microsoft will abandon phones all together.

“We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem that includes our first-party device family,” Nadella wrote in an email to employees this morning. “In the near term, we will run a more effective phone portfolio, with better products and speed to market […] Our reinvention will be centered on creating mobility of experiences across the entire device family including phones.”

It’s unclear just what a “more effective phone portfolio” entails, but it could be in part a renewed focus on higher-end devices. Microsoft unveiled a bevy of budget phones — the Lumia 532 (around  $93), Lumia 435 (around $81), and the $29 Nokia 215 — in January, which former Microsoft executive Harlow championed as a way to “[create] awareness and visibility for Windows Phone and Lumia” by “getting in the hands of more people.” That effort hasn’t borne fruit — Microsoft’s share of the mobile phone market hovered around 2.5 percent in Q1 of this year, a which represents a half percent decline.

Nokia’s last, much-lauded high-end handset fell short of sales projections, but Microsoft’s hoping to rekindle the Lumia line with the launch of two new phones, codenamed Talkman and Cityman, later this year. Both allegedly sport 3GB of RAM, QHD displays, 20-megapixel cameras, and triple-LED flash. Cityman will reportedly uniquely support Window’s 10 Continuum, a feature which effectively transforms any plugged-in monitor into a desktop workspace.

Nadella may have been a reluctant heir to the Nokia throne and Microsoft may still make more money from Android than Windows Phone, but that doesn’t mean the company’s about to abandon its handset business. Nadella outlined three areas of focus for the smartphone division going forward: business, value phones, and flagships. “Microsoft devices,” he wrote, “will spark innovation, create new categories and generate opportunity for the Windows ecosystem more broadly.”

Kyle Wiggers
Kyle Wiggers is a writer, Web designer, and podcaster with an acute interest in all things tech. When not reviewing gadgets…
OnePlus makes Apple Watch owners jealous with novel charging cable
Apple owners are having to pay a lot more for the privilage
A OnePlus smartwatch being connected to the POGO pin on the OnePlus 2-in-1 charging cable

Update 07/16: we've now included mention of Nomad's 2-in-1 charger for iPhone and Apple Watch

Look, I get it. Charging cables aren't exactly the sexiest product in the tech world and I'd forgive you for rolling your eyes - but OnePlus has introduced a new cable at a price point which makes it way more accessible than rivals.

Read more
Google Pixel 10 launch date confirmed with multiple devices teased
The Pixel 10 launch is just a few weeks away
The Google Pixel 9 Pro Fold, Pixel 9 Pro, and Pixel 9's screens.

Invites have gone out for the Google Pixel 10 launch event, along with a tease that there will be more than one product announced.

Google will hold its Made by Google event on August 20, with the invite reading "you're invited to an in-person Made by Google show where we'll introduce the latest additions to our Pixel portfolio of devices." The event kicks off at 1pm ET, 10am PT.

Read more
This leaked iPhone 17 Pro color has me excited for the iPhone 17 Pro
A close-up of the cameras on the iPhone 16 Pro.

I've been reporting on technology for almost twenty years, and I vividly recall the early years of the smartphone industry when companies like Nokia pushed the boundaries when it came to smartphone colors. 

Rather than the less exciting neutral colors that have become standard in the industry — gray, white, silver, and gold — Nokia launched phones in bright red, yellow, and other vibrant colors. Yes, there were still the same standardized options, but you also had bright neon colors, such as the yellow Lumia 1020 or the orange Nokia N8. 

Read more