Microsoft Corp. today announced plans to restructure the company’s phone hardware business.
Microsoft also announced the reduction of up to 7,800 positions, primarily in the phone business. As a result, the company will record an impairment charge of approximately $7.6 billion related to assets associated with the acquisition of the Nokia Devices and Services (NDS) business in addition to a restructuring charge of approximately $750 million 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.
The actions associated with today’s announcement are expected to be substantially complete by the end of the calendar year and fully completed by the end of the company’s fiscal year.
Source: Beleaguered Microsoft
MacDailyNews Take:
Windows Phone had a chance. Its chance was based on the court systems of the world working in a timely fashion to address patent infringement issues and thereby drive up the cost of Android to the point where it became cheaper for phone assemblers to adopt and push Windows Phone to those too ignorant, stupid, and/or cheap to get a real iPhone. Developers would follow. However, at this late date and getting later every second, Windows Phone may not survive, given the glacial pace and/or incompetency of legal “systems” around the world. Timeliness is everything in tech. Missed opportunities are gone forever.
[Regardless], that two of the world’s most inept CEOs, Microsoft’s Steve Ballmer and Nokia’s Stephen Elop, couldn’t succeed is hardly surprising. — MacDailyNews, July 18, 2013
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Steve Jobs killed Nokia long before Elop got there to pull the plug. — MacDailyNews, September 3, 2013
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Apple’s iPhone is a “niche product.” — Nokia’s then-CEO Olli-Pekka Kallasvuo, April 17, 2008
Olli-Pekka is currently “spending time with his family.”
SEE ALSO:
Major job cuts expected at beleaguered Microsoft – July 8, 2015
Satya Nadella? Seriously, Microsoft? – January 31, 2014Beleaguered Nokia to sell handset business to Microsoft for $7.2 billion – September 3, 2013
[Thanks to MacDailyNews Reader “Edward W.” for the heads up.]
Business schools should study Ballmer for years to come, or how not to put a giant company out of business.
Didn’t take me more than a minute to decide I didn’t want to own MS when the Nokia deal was announced.
The shareholders of Nokia got out and left it to Capt. Ballmer with the Titanic loser on its crossing to Silicon Valley.
Unfortunately, the shareholders of Nokia had already experienced a major downturn before Microsoft joined the party. The only Nokia shareholders who are happy are the ones that got out of the company in the mid-2000s (pre-iPhone).
Ballmer is just another in a long line of examples of Marketing-As-Management, an excellent way to destroy any company. Been there. Watched it happen first hand.
Next up: Sony!
It’s too bad Baldy and his 1st command minions walks away with Billions or Millions at the expense of hard working people. They get a piddly severance package as these fat turds of a leader walks away with the bank. 😡
What you say is literally true, he should be promoted in a case study, not just in how not to run a company, but how to ensure that people like him, who have no business running anything, don’t get promoted to CEO.
——RM
I like their strategy. I like it a lot.
Interesting take from mdn…
Ballmer had a plan…
Think of all those people with families.
Its a real shame. Thats a heck of a lot of people.
Some days I wish Balmer was still around. He was always good for a laugh.
Just look for the LA Clippers, he’ll take them down to the bottom.
Yah, he does appear to be working on the project there as well. But as owner, he doesn’t have a BOD to help him find another direction in life.
Om Nom Nom!
The one and only SmartPhone crashed all.
iPhone is one smart phone.
To review:
and this is what Ballmer thinks is innovation.
however, who is laughing this morning? With the markets down and 7800 people wondering about their future, MSFT is slightly up. Balmer has made more money this morning then anyone on the planet.
According to Ballmer (from the first video) —
Apple:
0 phone share –> Most expensive device intro –> certain failure
Microsoft:
0 MP3 share –> “High end” device intro –> 25% market share
So essentially, because Microsoft was able to do it, Apple won’t be able to do it.
Yeah, that played out exactly as predicted, didn’t it?
are these 7800 layoffs in addition to the 1800 announced just a few weeks ago? regardless, as I said then, no good numbers to be expected when MSFT announces earnings. And in “good old” Wall St fashion, MSFT is one of the few that go up today. weird.
Next weeks headline,
Apple scoops in and buys out Microsoft, just after share fall.
Sure, why not? Apple could run Microsoft’s divisions as independent subsidiaries. The chuckleheads on Wall Street would be flummoxed.
Microsoft has a ton of engineering talent, too much of it just pissed away on perpetuating legacy solutions. Year after year, their innovations were usually killed by senior management or twisted into some Windowsesque abomination. Apple culture could free them to do something better with their talents.
MS does have a lot of first rate software engineers and you can see the sprinkles of brilliance scattered here and there in MS products. But that brilliance was never brought together in one cohesive whole in any of their products because they didn’t have a single product lead who could make final decisions about product functionality or interface. Instead MS products were designed by committee with different departments being responsible for different aspects of their products. The blame for that rests squarely with top leadership (that sales guy). What a monumental waste of engineering by talent!
(Wait, am I crying for Microsoft? What’s the matter with me??!)
It will be a tough and uncertain road for many who are let go. But these people must believe that they can eventually find employment with companies that will truly value and utilize their talents to the fullest. Hopeful many of them can be big contributors to that next killer app for the iMac, iPhone or Apple watch.
No Dougless. Just no.
Nokia like Blackberry made the mistake of not going with Android. Whatever you say about Android the key fact is that their phones have sold okay. Both Nokia and Blackberry could have used their position in the market to successfully migrate to Android. A few more people in Norway would still have jobs if Nokia had done that.
Apple would still have kicked their butts since the iPhone is a superior product but Nokia could have remained relevant in the market.
Finland, not Norway 🙂
Both Blackberry and Nokia already had operating systems when Android was perpetrated. It wasn’t until both companies were hitting the skids that Android started grabbing the low end market share. Kind of late for both of them at that point.
If Nokia had gone with Android, how would they have differentiated their products from all the other cheap Android phones?
Nokia, Blackberry and Microsoft all had their own phone operating systems and had an opportunity to choose their own direction and create something compelling. As it happened, they all missed or screwed up that opportunity.
Why are we set up to allow a business to waste so much money without any repercussions? At least, according to the article, they can’t write this off, so maybe we’ll see some tax revenue. But, I ain’t holding my breath.
When a company initially goes public it is selling shares of risk/reward. You, the initial buyer, get nothing for giving them your money except a hope that the price of the stock you now hold will rise. Meanwhile, the company has the sum total of all those share sales to invest in things they hope will help the company become more profitable, gaining the trust of share buyers to drive up the price of those outstanding shares. So what’s written off here is original investment by share buyers. It’s an acknowledgement that the risk taken by those buyers and subsequent owners was bad risk — they lost, meaning the money they handed over to the company is essentially spent with no future return from it. They are free to sell their shares to recoup their investment, and if they took a loss on those shares they do have some tax benefits.
This is good for Microsoft and BAD for Apple. Because, no doubt, all these MS employees will try to get jobs at Apple. With Cook pushing out one of Jobs’ top picks and hiring some that Jobs would label as “Bozo’s”, things are looking bad.
“Beleaguered Microsoft” ?? Really…..read much?
I’ve seen exactly two Microsoft phones in the wild. Two. Ever. It’s time Microsoft stopped pretending it even has phone division and focus elsewhere.
GOOD TIMES!
👏☁⚡🎊🎉👍
Apple has the $$$ to buy almost any company they want. How ironic would it be to see the once formidable Microsoft be purchased by Apple only to have their patent portfolios picked through and the company dismembered and become a footnote in tech history? What an amazing case study that would make for the business schools. Unfortunately, without the Winblows available to the plain box pc makers, monopoly cries would surely squelch the deal. Apple has the power today to cut off the entire PC industry with a few pen strokes. No more Windows support. BOOM choose now between Redhat or El Capitan because we shut down Windows. Or they could sell off the Windows division which would keep the “PC” market alive for lower end makers. Funny how the tables have turned or could be turned if Apple had the evilness to attempt such. This shows that Apple got it right. Slow and steady wins the race. Just remember how this little computer company would have loved to sell as many Apple II computers in 1980 as the same companys’ watch sold in its first 10 minutes of availability 30+ years later. Apple proved that market share does not always translate to better product. Windows vs Mac dominance is not alone make a company great. Microsoft had a brain fart called Ballmer that was a cancer removed too late.
As much as I’d like it to be true, Apple does NOT have the cash to buy Microsoft. Microsoft’s current value is 359 billion and Apple has 190 billion in cash.
However, just the thought of Balmer and Gates being forced to sell their shares in Microsoft because of a buyout is worth a big wide grin. 🙂 🙂
How do Jobs put it? Stocks may go up and down, but this is worth a moment of reflection.
This is par for the course for MS. Buy something for billions and then a few short years later sell off the assets in a fire sale and write the whole thing off.
Great captioning, MDN! Made me chuckle…
I remember Nokia being a great phone maker. I had several of their phones. My last one was a Nokia 6682. I loved it. Look at Nokia now. Microsoft ruined them. Why go through all the trouble to acquire the company and then just run it into the ground? I’m not a fan of Windows Phone, but it had some potential, and Nokia had the engineering know how to make great products. This is very sad.
Although I’m sorry people are losing their jobs I have to point out what happened to all those analysts who claimed Win Phone would outsell iPhone by 2015 -16?
like:
Networldworld 2012:
“Analysts Claim Windows Phone Will Outsell iOS By 2015.
This hot product …. the Lumia 900 and its successors will help Microsoft to reclaim its No. 2 ranking in smartphone operating system market share in 2015.”
Tomsguide 2012
“A new report released by IDC predicts Windows Phone surpassing Apple’s iOS by 2016”
Paul Thurott WindowsSuperiste 2012:
“Windows Phone that will experience the greatest growth over the next four years, at least according to IDC. It will experience an incredible 46.2 compound annual growth rate (CAGR) over the next year to achieve 19.2 ”
WindowsPowerUser 2014 : “Gartner has posted its predictions for the smart device market for the next 2 years….. From 2015, we expect Windows to grow faster than iOS,” said Mr. Atwal.
Predictions which were actually BETTER than previous :
Zdnet
“Back in 2011, IDC forecast that by 2015 Windows Phone would take the number two slot from iPhone worldwide; by 2012”
!!!!
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Unfortunately though Msft has a stock valuation way higher than Apple (P.E of 18 vs Apple’s 15) because big investors (like PC using mutual fund managers) believe all the B.S.
Microsoft takes a 7.6 billion dollar loss and lays off nearly 8,000 employees. It suffers a 0.14% loss. Apple has record sales of iPhones, Apple Watch, Macs and loses 2.4%. Delusional Psychosis rules!