Microsoft SLASHES 7,800 bods, BURNS $7.6bn off books in Nokia adjustment Microsoft will carry out one of its largest rounds of job cuts and a record book writedown in a restructuring plan that calls time on its ill-fated Nokia acquisition. The Windows goliath confirmed on Wednesday (July 8) that 7,800 staff will go, primarily from its phone hardware business – the Nokia devices and services unit it …
That's a $4 million loss on the gross margin (unadjusted margin).
UM = (Sales price) minus (manufacturing cost + shipping + marketing + warranty + etc.)
That is before you take into account R&D costs (which give you your product contribution, i.e. bottom line).
32,000 employees were transferred. After that MS pink slipped ~18,000 (true, of the 18,000 not all were former Nokia staff).
So that leaves ~14,000 employees left. Say it costs MS $200,000 per year per employee (salary + office space + computer + IT infrastructure + pension + insurance + ...).
Loss = ~$2.8 billion per year. That a lot of $ to absorb.
Keep going, "Bob". If you can FUD everyone away from WP then there'll be more targets for all that Android malware you write!
Trolls aside, I don't see a problem with this. Bloomberg says MS will reduce the new handset count to six models per year which is a) 2 more than last year and b) less confusing than Nokia's "hurl endless confusing version numbers at the wall in the hopes that one of them is popular".
Which sort of worked with the 520, to be fair, but a low-end 640 with XL variant (which already exists), a mid-range 840 with XL variant and a flagship 940 with XL variant (already much rumoured) would make a great deal more sense.
And if MS really want the business market, they could go Dual-SIM on all models.
Probably most of those Surface sales are replacing the sales of Windows licenses for ultrabooks, so I doubt it really helps Microsoft all that much especially if you counted all the R&D for the hardware against it.
Contrast with Apple and Samsung, whose tablet sales aren't cannibalizing their laptop sales but are rather complementary to them, because the iPad and Galaxy Tab are a different product with a different OS than their laptops.
So under Nadella that's 18,000 (mostly ex-Nokia) in July 2014 + 2,100 in September 2014 + 7,800 now (again, mostly ex-Nokia). And Surface RT was a $1bn writeoff + $7.6bn writeoff for Lumia. Have I missed anything?
So how's Windows going to be everywhere if anything they do with ARM turns to crap?
"So how's Windows going to be everywhere if anything they do with ARM turns to crap?"
I couldn't say, but an announcement like this sounds like the death knell for WIndows Phone. Nadella can claim he's sticking with the WP software project, and only exiting hardware, but who's going to buy a WP phone when they've just heard that Microsoft are exiting phones? What OEM is going to risk making WP handsets when Microsoft won't eat their own dogfood? And why will Microsoft continue to invest in a phone OS that they have to give away?
Hopefully they'll do a last run of WP Lumia's in tastefully silk lined, coffin shaped boxes with little brass handles on the side, so that Microsofties can buy and treasure the memory.
Windows Phone died a long, long, time ago. It was never really alive achieving only 3% marketshare after countless billions in marketing.
I thought that the Windows Phone developers parading iphone coffins around campus when WP7 launched 5 years ago was incredibly distasteful, and arrogant, and it seems they've got their just deserts.
>I couldn't say, but an announcement like this sounds like the death knell for WIndows Phone.
I predict:
1. MS fires all former Nokia staffers
2. Nokia rehires some of them and starts selling phones again.
3. MS buys Blackberry and tries to put WP10-Enterprise-Plus-Server-Off-Premise-Edition-Pro on Blackberry hardware.
4. Nadella is replaced by Cortana.
> 4. Nadella is replaced by Cortana.
Now that actually would be a great idea. Imagine all company management replaced by AI. It's as wonderful a prospect as self-driving cars.
Imagine management making rational, fact-based decisions, rather than the mad, drunken, macho posteuring, self-interested, insider-trading, and random brain-fart-based management performed by our current meatsack masters-of-disasters.
Just give the AI management rules to find a sane balance between share-holder and public benefit: a fixed percentage of profit to R&D; no raiding of pension-funds; maybe efficient co-ordination with other companies rather than effort-duplicating competition; with clear goals to improve tech based on open-standards.
Sounds good to me.
I for one welcome our silicon-based managebot masters.
NOKIA got really big in mobile phones in a different era and it is very unlikely that their previous 50%+ market share position could ever be re-attained.
That said, I guess they could start from scratch and try some niche markets. They were always good at the phone cameras and they had good production quality and OK designs. There may be some useful and profitable areas for them, but a major global player in mobile phones generally is probably not one of them. This belongs to the hordes of Chinese manufacturers forever more I suspect.
It seems with this announcement previous predictions that MS would quickly get rid of the dumb phone part of the business have now been realised and the destruction of all NOKIA handset division value is now almost complete. After a suitable amount of time, the Lumia will be buried and MS's foray into the mobile handset market will be at an end.
Oh, and how is that 8Bn purchase of Skype working out for MS financially?
> What OEM is going to risk making WP handsets when Microsoft won't eat their own dogfood?
But, when MS bought the Nokia phone division to make their own phones, people said "Who will make a WinPhone when MS make them and have all the advantages?"
That seems to be true, where I live anyway, I only know one person with a non Lumia WinPhone although there appear to be figures stating many more competitors sell WP than MS.
From my point of view, from hearing that there will be no more Lumias to yes but only Flagship/Business/Low end, suits me fine - I will eke my 1020 until a worthy replacement allows me to give up the pixels for high speed and some other goodies.
>It'll still run on RasPis' – no risk there for Microsoft!
What an inspired strategy! Windows for the PiPhone/TyPhone
Which given David Hunt and Tyler Spadgenske have effectively put the design and software in the public domain means it has the potential to be the phone equivalent of the IBM PC... Shame it's 2015 and not 1981...
> It'll still run on RasPis' – no risk there for Microsoft! ;-)
It doesn't run on Raspberry Pis yet, there is a preview.
It isn't a real 'Windows 10', there is no 'desktop', there is no 'launcher', it is not even like a WinPhone. It allows a single 'sketch' to run that can access an Arduino like API library to use the GPIO.
http://www.mikronauts.com/raspberry-pi/how-can-i-install-windows-10-on-the-raspberry-pi-2/
No mention of where in the world these poor sods will be laid off. As it's the Nokia division is it the USA or Finland?
Plus just a thought, but under the rules mooted for our banking friends, How much would Steve B have to pay to back to Microsoft from his final bonus as a mark of his <ahem> success?
" is it the USA or Finland"
The US is long gone. As is all Europe outside Finland.
China, Finland and the remaining production site(s) and whatever scraps of local Sales/Marketing remained are pretty much all that is/was left to cut.
Will the last Nokian standing please remember to let the cat out and turn off the lights?
Drama to one side for the time being, Microsoft are cutting costs and becoming leaner and meaner.
One of the single biggest costs to a company is it's people - so I'm not overly surprised by this.
The naysayers who bemoaned Microsoft for being a bloated corporation now try and seize on this as a portent of doom, when in reality it's simply yet another company saving money by shedding people.
As for Nokia- the sooner we get their next FY results out and done with, the sooner they can get back to supplying their 1.5 billion customers.
There said it. Windows Mobiles are never going to be anything more than an afterthought. I did the unthinkable and went from WM6.5 to android and never been happier. Some people get on with windows mobiles, I hated it.
Trying to get from 3rd to 1st isn't going to happen. Apple is already there, Android works well for me across home / business so Microsoft should just go back to making decent desktop / server software and stop trying to converge everything.
Well that's what Nadella's doing. After having two tries at getting everyone to use Apps that run everywhere (Windows Runtime and Universal Apps) they've got nowhere to apart from x86 computers and x86 tablets. And for that developers are going to stick with Win32 instead of being forced to use an API which offers less than Win32, which means that Windows is more than ever a classic desktop/laptop OS.
At least Balmer got Microsoft to the place where it needed to be, which was ready to expand into other device forms. Nadella's just killed that.
This is disgusting. How can so many lives be destroyed when Nokia was worth $7 billion less than two years ago? Ok so assume Microsoft overpaid, how can it not be worth even $1 million to someone else?
Or is he shredding jobs just to further his own career and reputation as the new "fred the shred"?
Mergers and acquisitions seem to turn out badly far more often than they are a success.
Valuations, especially write-downs, are primarily accounting devices. Take a bet on an acquisition and it doesn't pan out then it's much smarter to write it off quickly otherwise you carry the inflated value of the assets on the books as goodwill for years.
A big hit in this quarter gets the bad news out of the door and will make next quarter look all the better. A big hit can also be nicely offset against profits to reduce the tax bill.
Interesting that Skype, which Microsoft outbid itself for, has yet to be written down.
Gee, another 7800 jobs? That's peanuts! When the deal to purchase Nokia Mobile Phones (where I worked for 2 1/2 years) closed, they laid off 12,500 of us. That was just over a year and a couple of months ago. So, over 10K jobs in 1+ years? Ain't MS just great! No doubt their stock will rise after this...
no-one will like me for saying this but Nokia (phone division) was already dead before MS got involved. It was already a business case of a giant missing the boat and failing badly (aka Kodak).
MS gave Nokia staff a few more months to look for a new job you can't blame them.
Also $7b is not much to lose for a company the size of MS. Don't forget their profits (not revenue) are $22b annual. It's part of the ebb and flow of corporations I'm truly sorry for those that were made redundant but these companies are not charities to prop up failed business and the unfortunate people who were in the wrong place at the wrong time
no-one will like me for saying this but Nokia (phone division) was already dead before MS got involved. It was already a business case of a giant missing the boat and failing badly (aka Kodak).
Nope. They were actually rebounding upwards, and Symbian Belle was getting rave reviews ... up until the Elopocalypse. MS's strategy for borging Nokia instead killed the only strong non-Apple, non-Android smartphone competitor. Sure, by the time MS bought the phone division it was pretty much dead weight, but that was because of MS's mingling in the first place.
"Symbian Belle was getting rave reviews"
Perhaps, but at the same time iPhone was already on revision 4 or 4S. There was no comparison.
It wasn't just the platform - iPhone already had a easy to use App Store (itself the killer app) whereas the Nokia counterpart was hard to use, and had a minuscule selection of software. The battle was already lost no matter what Nokia would have done to Symbian.
NB: I had a C7 and N8 (both with Belle)
Symbian Belle might not have been as polished as an iPhone but it more than held its own against Android at that time, the N9 was shipped with Meego before it was knocked on the head, and the Symbian/Meego/QT transition plan was ready. So to say that it was right to write all that lot off is a mistake.
Now that Windows Phone is pulling a BlackBerry, and Windows RT is toast, along with the walled-garden Surface non-Pro tablets, maybe they can focus on PCs again. Windows 10 was a good start for them as far as distancing themselves from the Windows 8 era, but they need to face reality. No one is buying apps from their store, they're not going to get the 30% cut of everything Apple gets.
They need to focus on building a really great general purpose OS that runs on a variety of devices.
..when Elop was parachuted into Nokia board (who were themselves living in a cave trying to make Symbian touchscreen friendly and all that smart assy delays). Nokia N96/7 - remember ?
What a nightmare it was getting the damn thing fixed and working !
Guess they both deserved each other into annihilation. Sad as it may seem , if only for the Nostaligc Nokia brand during feature phone days. Good hardware but .........sigh. Nothing now to show for all those glory days.
So why is Windows 10 so phone centric? Everything to do with the desktop in current builds is castrated. What I want from Windows 10 is a superior desktop experience. Yes I like aero. I have a GT960 4 GB graphics card and an ssd and 32GB of RAM. I can run pretty aero windows with no performance hit. I also have 3 x 22" LG monitors so Windows 10 dialogue boxes with 2 lines of text take up a ton of screen real estate. Scraping Windows Phones which have no real market share yet Microsoft owns the desktop with 90% of users and we are being thrown out with post Windows 7 versions. I see Windows 10 as a fail and Windows 7 getting extended past 2020.
"I see Windows 10 as a fail and Windows 7 getting extended past 2020."
We'll see. Windows 8 is already being treated exactly like Windows Vista was right before 7 came out. Basically, they're doing everything they can to bury Win8, including offering upgrades from Windows 7 and 8 for free. I think Microsoft will do the absolute bare contracted minimum to support 7 and 8, holding out the "Oh, that's fixed in the free Windows 10 upgrade!" carrot. For example, don't expect features to be back-ported the same way some of the Server 2012 features are coming back to Server 2008 R2 as installables.
Go look at Windows Feedback in the Preview, and type in "aero" or "title bar color" in the search box. You will see hundreds of "OH PLEASE GOD GIVE US BACK AERO" posts with hundreds of upvotes. It's obvious that they're not listening, and are determined to make a go of Windows Phone in at least one market segment. With that phone focus comes the OS monoculture. And in true Jobsian style, everyone's user interface must be identical.
I'm holding on to my Windows 7 until the bitter end and probably for a little bit after that. Sure I will miss DirectX 12, but that is a small price to pay for a customizable start menu, a GUI that is beautiful, an OS that respects my privacy, and an OS with an option to enter a safe mode or a recovery console any time I need without requiring me to modify something in the OS.
Nokia is already gearing up to start making phones again from next year I think? A genius deal, sell the phones division to Microsoft let them mess about with it for a couple of years and make sure a condition of the sale is you can back to making phones again in no time at all. They lost their brand for 2 years was it? Microsoft dumped the name anyway so no damage done and next year they can use it again. The average person buying can't bar phones would never know they had been sold and resurrected.
In 2013 Forbes mag printed that Steve Ballmer was the worst American CEO http://onforb.es/188irDq. Now on the heels of latest layoffs and write-offs Forbes points out this is another action on a 3 year trek toward irrelevancy for Microsoft in its former "core" markets http://onforb.es/1TnX8rl
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