Summary
Microsoft Corporation announced significant restructuring within its phone hardware business on July 8, 2015. This strategic shift involves a reduction of up to 7,800 positions, primarily impacting the phone segment, and is intended to better focus and align resources. A substantial charge of approximately $7.6 billion will be recorded in the quarter ending June 30, 2015, due to the impairment of goodwill and assets related to the Nokia Devices and Services acquisition. Additionally, the company anticipates recording restructuring charges between $750 million and $850 million. These operational changes are expected to be largely completed by the end of the 2015 calendar year and fully implemented by the end of fiscal year 2016. Investors should note that the impairment charge does not impact cash flow from operations and is non-deductible for tax purposes. The future prospects for the Phone Hardware segment are now expected to be below the company's original projections.
Key Highlights
- 1Microsoft is restructuring its phone hardware business to improve focus and resource allocation.
- 2Up to 7,800 jobs will be reduced, predominantly within the phone segment.
- 3A significant charge of approximately $7.6 billion for goodwill and asset impairment related to the Nokia acquisition will be recorded in Q4 FY15.
- 4Restructuring charges are estimated to be between $750 million and $850 million.
- 5The impairment charge does not affect cash flow from operations and is not tax-deductible.
- 6The company acknowledges that future prospects for the Phone Hardware segment are below initial expectations.
- 7The restructuring is expected to be substantially completed by the end of calendar year 2015 and fully by the end of fiscal year 2016.