Beleaguered Microsoft axes up to 7,800 employees, writes off $7.6 billion from Nokia deal

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.

Stephen Elop and Steve Ballmer
Two idiots. Stephen Elop (left) and Steve Ballmer

 
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

Steve Jobs killed Nokia long before Elop got there to pull the plug. — MacDailyNews, September 3, 2013

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.]

39 Comments

  1. 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.

    1. 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.

  2. 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.

  3. 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.

  4. 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.

    1. 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.

  5. 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.

  6. 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.

  7. 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”
    !!!!

    —–
    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.

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