Microsoft will cut 7,800 jobs and take a $7.6 billion impairment charge to restructure its flagging phone hardware business.
The company paid $7.3 billion for Nokia's phone business in April 2014 in an effort to focus on mobile phones and Internet services priorities for the company as its traditional software business slowed.
But Microsoft's Windows Phone system has gained little traction against Apple's iPhone and Google's Android system.
Now the company says it will write down more than the entire cost of buying Nokia and also take a $750 million to $850 million restructuring charge.
The company is in the midst of a broader restructuring announced last year that includes cutting 18,000 jobs. Microsoft said it will give more details when it reports earnings on July 21.
Recently, The Christian Science Monitor reported on Microsoft's departure from the ad business.
The company will be giving AOL and AppNexus control of its display ads division, as part of chief executive officer Satya Nadella’s longtime plan to focus the company’s mission.
The partnership between Microsoft and the two ad services was announced Monday on the company’s official blog. “AOL will become our seller of all display formats, including mobile and video, for the Microsoft portfolio across nine markets,” the company writes. “[AppNexus] will become our exclusive programmatic technology and sales partner in 10 markets.”
Starting next year, AOL will manage and sell advertising for Microsoft products such as Xbox, Skype, and Outlook. In turn, Microsoft’s Bing service will power search and search advertising on AOL websites such as The Huffington Post and Engadget.
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This takes the burden of advertising away from Microsoft, who has been slowly leaving the display ads industry over the past several years and focusing on Bing’s search ads capabilities.
Mr. Nadella, who’s served as Microsoft’s CEO since 2014, has made a point to focus Microsoft’s strategy since taking the position. Recently, he outlined his vision for the company in an internal e-mail, with the company’s new mission statement: to “empower every person and every organization on the planet to achieve more.”
The advertising business is not in line with Nadella's strategic vision.
This should come as no surprise to those who have been following Microsoft’s changes over the last year. Selling off the ads division is only the latest in a series of cuts the company has made to focus on three sectors: personal computing, cloud platforms, and business productivity.