In a notice to investors sent out on Wednesday, Microsoft CEO Satya Nadella said the company will cut 1,850 jobs as the company rethinks its smartphone hardware business unit.
The move will results in $200 million in severance payments, which will be recorded as part of a larger $950 million “impairment and restructuring charge” for accounting purposes.
According to the company, 1,350 of those reductions will impact employees in Finland, while the remainder of the job cuts will hit employees distributed around the world. Most of the cuts will take effect by the end of this year with full completion of the restructure set for July 2017.
“We are focusing our phone efforts where we have differentiation — with enterprises that value security, manageability and our Continuum capability, and consumers who value the same,” Nadella said. “We will continue to innovate across devices and on our cloud services across all mobile platforms.”
Microsoft purchased Nokia’s handset business in 2013. But, based on some movements last week, the Nokia brand is poised to return to the device business with Android-based smartphones and tablets.
Regarding that situation, a new company called HMD now owns the intellectual property license for Nokia phones and has “an exclusive global license to create Nokia-branded mobile phones and tablets for the next 10 years,” according to Nokia. HMD will pay royalties based on phone sales.
Company officials said HMD was formed specifically to focus on selling branded consumer products; it plans to invest $500 million over the next three years “to support the global marketing of Nokia-branded mobile phones and tablets, funded via its investors and profits from the acquired feature phone business.”
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Nokia Technologies President Ramzi Haidamus said he’s excited for the company to revive “a truly iconic name” in handsets. Also involved in that deal is a subsidiary of manufacturing giant Foxconn, which bought the feature phone business.