The fortunes of Microsoft (NASDAQ: MSFT) are dipping down in the recent past and the same situation has prolonged at the time of its quarterly profit announcement. According to the sources, a dip of 7 percent has been witnessed in the quarterly profit of the world’s biggest software company. The profit dip has been credited to its $7.2 billion worth Nokia’s acquisition.
The Chief Financial Officer of Microsoft entered into a conversation with analysts and stated that the company is aiming to take out $1 billion from its operations focused on Nokia. The fiscal year 2016 is taken as the milestone for stopping the losses by Microsoft. This is the reason why Microsoft announced an ample of job cuts in the last week.
The decision by Microsoft has cheered Wall Street from the within. It had not been expecting such a loud and bold decision by Microsoft. Daniel Ives, an analyst working in FBR Capital Markets stated “The expense guidance around Nokia was much better than feared “. He also added, “While there is still some heavy lifting ahead, it appears brighter days are on the horizon for Microsoft after a decade of pain and frustration.”
The result of the job cuts was such that the shares of Microsoft reached the peak over the past week. This high has never been recorded in the period of last 14 years. Nokia had been bought by Microsoft at the hefty cost of $7.2 billion. The decision of Microsoft to buy Nokia was aimed at competing with the likes of Apple and Samsung and challenges them in the uprising smartphone market. However, things did not go where they were directed to go and Microsoft incurred heavy losses accounting for $692 million.
After incurring these heavy losses, Microsoft changed its strategy when it comes to Nokia operations. Microsoft is planning to halt the Nokia operations, in order to minimize the loss by the year 2016.
Earlier, in a 3,105-words memo written and distributed on Friday to all its employees, Microsoft’s new CEO Satya Nadella mentioned that the company will be focusing more on the cloud, mobile and productivity instead of devices and services. Later, the decision that was in the pipeline has finally been taken by Microsoft. Last Thursday, Nadella announced that the company is looking to cut down as many as 18,000 jobs, which apparently accounts to 14 percent of the total workforce in the company. The reason for the layoff contributes to the restructuring of the company.
Will the layoff help Microsoft? Well, it is quite a trick question for anyone to answer. But as a matter of fact, most of the experts are of the thought that this layoff will only help Microsoft for the better. Although, the layoff will not be a good experience for the ones who lose their jobs, but from the point of view of the company, Microsoft is in serious need of fresh brains. To add to it, keeping all the employees who migrated from Nokia would have added to the wage bill of Microsoft. The company itself has the manpower who can take Nokia to greater heights.
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