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In an internal email to employees in late June, Microsoft (NASDAQ:MSFT) CEO Satya Nadella said, “We need to innovate in new areas, execute against our plans, make some tough choices in areas where things are not working and solve hard problems in ways that drive customer value.”
The day of making hard choices has arrived. Microsoft announced that it would be taking a write-off (impairment charge) of $7.6 million dollars, taking a restructuring charge of about $800 million, and cutting up to 7,800 positions. Microsoft shares are up slightly today by 0.62% to 44.58. That’s against a 52-week high of 50.05 and a low of 40.12 for the same period.
Everything about today’s announcement seems to be directly or indirectly related to Microsoft’s September 2013 deal with Nokia to acquire “substantially all of Nokia’s Devices and Services business, license Nokia’ patents, and license and use Nokia’s mapping services.
The CEO of Microsoft at that time, Steve Ballmer, had said the deal was, “a win-win for employees, shareholders and consumers of both companies. Bringing these great teams together will accelerate Microsoft’s share and profits in phones, and strengthen the overall opportunities for both Microsoft and our partners across our entire family of devices and services. In addition to their innovation and strength in phones at all price points…with the strategy, financial resources and determination to succeed in the mobile space.”
An Old New Direction
Microsoft’s attempt to gain traction in mobile has been a bust. Just ask any owner of a Nokia phone with Microsoft Windows installed. I happen to know one very well – me. Here is my review of the Windows phone: It sucks. And if I ever find the guy who convinced me to buy it, I may be compelled to cause him bodily harm. If the iPhone motto was, “There’s an app for that,” the Windows phone should be, “No, there’s not.” It is so bad that people look at me like I have “SUCKER” written on my forehead. (I don’t, by the way. I checked in the mirror. It says “ƧUƆᐴƎЯ.”
Nadella said today that, “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. In the near-term, we’ll run a more effective and focused phone portfolio while retaining capability for long-term reinvention in mobility,” which is a fancy way of saying, “Let’s get out of here while we still can!”
The new direction, which is really the old, pre-Nokia direction, will see Microsoft, “aligning our engineering efforts and capabilities to deliver on our strategy and, in particular, our three core ambitions.” Those three core ambitions are:
- Reinventing productivity and business processes
- Building the intelligent cloud platform
- Creating more personal computing
Nordella hopes that, “This change will enable us to deliver better products and services that our customers love at a more rapid pace.”
I hope so, but I’m personally looking forward to getting rid of my Nokia Windows phone. What am I bid.
