Microsoft Corp. today announced plans to restructure the company’s phone hardware business to better focus and align resources. 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.Don't get too excited by this that it is an indication of a down move in the business cycle. Even in overall booms firms can make huge mistakes that must be liquidated. This is such a case. As the press release makes clear. it is mostly about their phone business.
Today’s announcement follows recent moves by Microsoft to better align with company priorities, including recent changes to Microsoft’s engineering teams and leadership, plans to transfer the company’s imagery acquisition operations to Uber, and shifts in Microsoft’s display advertising business that enable the company to further invest in search as its core advertising technology and service.
Today’s plans were outlined in an email from Microsoft CEO Satya Nadella to 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,” Nadella said. “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 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.
-RW
I didn't think a crony fascist mega-tech company would be "allowed" to liquidate a huge mistake in a fashion so contrary to the approved narrative about the health of the economy. Markets breaking too. Strange days, indeed.
ReplyDeleteWhat percentage of the 7,800 will be H1B visa holders? Very few I suspect. Same as the recent Intel reduction.
ReplyDeleteI think the definition of the technical term "boom" needs refinement, or else we need a new word to describe the inflationary phase of ABCT. "Boom" has too many popular connotations that can confuse people. Crudely put, "Money printing" + cooked-up government stats = boom, (--> inebriated good times for all), does not accurately describe the current economic danger central banking and corporatist government central planning has put us in. More people are worse off now than before the Great Fix back when "the sucker was going down".
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