Microsoft hangs up on Nokia business, to cut 7,800 jobs-New Video

 Microsoft hangs up on Nokia business, to cut 7,800 jobs-New Video

Microsoft Corp (MSFT.O) said on Wednesday it would cut 7,800 jobs, or
nearly 7 percent of its workforce, and write down about $7.6 billion
related to its Nokia phone business.

Most of the job cuts will be
in the phone hardware business, underscoring the company's shift in
focus to software and cloud from hardware.

About a third of the
layoffs will be in Finland, where Microsoft will shut down a product
development unit, according to Finland's national broadcaster YLE.

This
is the second round of job cuts since Satya Nadella took over as chief
executive in February 2014. Microsoft said last July it would slash up
to 18,000 jobs.

Nadella has played up Microsoft's cloud and
enterprise software capabilities, but investors have been concerned that
the transition to cloud was not offsetting weakening sales of Windows
and Office and a bleeding phone business.

Microsoft was widely
expected to write off all or part of the $7.2 billion it paid for
Nokia's handset unit in 2014, a deal that left the company with a
struggling business and only 3 percent of the smartphone market.

The company announced last month that Stephen Elop, the former top boss at Nokia (NOK1V.HE), would leave.

"Overall,
we believe Nadella's proactive approach at cleaning up the Nokia
acquisition is a positive "tipping of the hand" around Microsoft's
future focus on software," FBR Capital Markets analyst Daniel Ives wrote
in a note.

Microsoft's shares rose as much as 1.4 percent on Wednesday.


Cross
Research analyst Shannon Cross said she expects more cost cutting in
the next couple of years as Microsoft needs to become more competitive
in the smartphone market.

The company, which had more than
118,000 employees worldwide as of March 31, said on Wednesday it would
take a restructuring charge of about $750-$850 million in its fourth
quarter ended June 30.

RBC Capital Markets analyst Ross MacMillan
said he estimates the latest layoffs to reduce operating expenses by
more than $1 billion on an annualized basis.

Microsoft shares have risen about 22 percent since Nadella took over in February last year.

(Additional reporting by Sabina Zawadzki in Copenhagen; Editing by Saumyadeb Chakrabarty).