Microsoft Stops Manufacturing Mobile Phones, Results in 1,350 Job Losses in Finland

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A Lumia phone. Picture: Seppo Sirkka Eastpress / Finland Today

Today Microsoft has announced plans to “streamline” the company’s smartphone hardware business, which will impact up to 1,850 jobs globally. In Finland, this equates to a loss of 1,350 jobs at Microsoft Oy, as well as a shutdown of mobile device research and development operations. The remaining 500 will be cut from worldwide positions.

Today’s announcement comes hot on the heels of last year’s closure of the Salo site, with the loss of 2,300 jobs, and barely two years after Nokia’s mobile phone and device divisions were sold to Microsoft for 5.5 billion euros in 2014. Microsoft is also taking a $950 million impairment and restructuring charge as part of today’s announcement, with about $200 million of that total attributable to severance payments.

Employees working for Microsoft Oy, a separate Microsoft sales subsidiary based in Espoo, are not in scope for the planned reductions. “We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” said Satya Nadella, chief executive officer of Microsoft, in a bulletin. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”

The cuts are expected to be substantially completed by the end of the calendar year and fully completed by July 2017, which is the end of the company’s next fiscal year. Today’s announcement is part of Microsoft’s previously unveiled strategy to try to gain inroads with customers in the business phone segmentwhere they believe security and manageability is an unfolding strength of the system.

More information about these charges will be provided in Microsoft’s fourth-quarter earnings announcement on July 19, 2016, and in the company’s 2016 Annual Report on Form 10-K.

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