Microsoft Takes $7.6Bn Hit, Plans 7,800 Layoffs

Microsoft is taking a big writeoff on its smartphone business (which it acquired from Nokia in 2013 for $7 billion) to “better focus and align resources”–including slashing up to 7,800 jobs.

The company will erase $7.6 billion from its books to pay for the acquisition, in addition to taking a restructuring charge of approximately $750 million to $850 million.

The Nokia experiment– meant to give Microsoft an answer to Apple and Google’s vertically integrated market approaches–clearly has been a failure overall, but the company doesn’t plan to exit the phone business entirely.

Microsoft CEO Satya Nadella told Microsoft employees, “We are moving from a strategy to grow a standalone phone business to a strategy to grow and create a vibrant Windows ecosystem including our first-party device family. In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

Microsoft will record a charge in the fourth quarter of fiscal 2015 for the impairment of assets and goodwill in the Nokia division.