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Microsoft to Lay Off 7,800 in Smartphone Business Restructuring

Microsoft is cutting more jobs as the company looks to refocus on core businesses while struggling to gain traction in the mobile space, announcing the elimination of up to 7,800 positions primarily in its smartphone unit.

The tech giant said it will record an impairment charge of $7.6 billion related to the acquisition of the Nokia mobile business in addition to a restructuring charge of approximately $750 million to $850 million. Microsoft closed its $7.2 billion deal for Nokia’s Devices and Services group in April 2014.

The job cuts — which represent about 7% of Microsoft’s workforce — are the second major round under CEO Satya Nadella, who was appointed chief exec in February 2014. Last July, the company said it would slash 18,000 positions in its biggest-ever layoff, most coming from the Nokia acquisition; that included staffers at Xbox Entertainment Studios, which Microsoft shuttered two years after its formation.

Microsoft has failed to capture market share with the Windows Phone operating system. In the first quarter of 2015, just 2.7% of smartphones shipped worldwide ran the OS, compared with 78% for Google’s Android and 18.3% for Apple’s iOS, according to research firm IDC.

In a statement, Microsoft said the layoffs will help the company “better align with company priorities.” Other recent actions include plans to transfer the company’s imagery acquisition operations to Uber and Microsoft’s sale of its display, video and mobile advertising business to AOL (now owned by Verizon).

“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 a memo to employees. “In the near term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility.”

Microsoft said it expects the layoffs and related restructuring to be substantially complete by the end of 2015 and fully completed by the end of the company’s fiscal year (which ends June 30, 2016).

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