Microsoft to Shut Finnish Unit; Expand Windows Ecosystem
Microsoft Corp. MSFT fails to work its magic when it comes to the mobile phone market. The company has done it all, from revamping its software, changing a number of executives to splurging billions on a hardware business buyout, but to no avail.
The software developer has confirmed that it will close Nokia Oyj's former handset product development unit in Salo, Finland, resulting in up to 2,300 job cuts. However, the Espoo and Tampere sites will remain operational for now.
This move is part of Microsoft’s internal restructuring program to lay off up to 6% or 7,800 employees, primarily in the Nokia handset business. The phone business was acquired last year and during the recent reorganization was merged with Windows and Devices group.
The workforce trimming is aimed at enabling Microsoft to focus more on the core business, and emerging areas like wearables, cloud-computing and productivity software in addition to other value-adding units. In this regard, the company recently sold portions of its mapping business and ad sales business to AOL, now owned by Verizon VZ.
Reportedly, Microsoft also plans to expand its Surface family of tablets and new premium Lumia smartphones, all operating on the Windows 10 platform. Though not much is known yet, the mobile phones have been codenamed Cityman and Talkman. These are expected to be high-end Lumia smartphones, and should have advanced features such as an iris scanner, among others.
Microsoft is shifting focus toward growing and creating an exciting Windows ecosystem including its first-party device family instead of the expansion of an independent phone business. Meanwhile, it continues with its other plans including newer versions of Office applications for Android and iOS, upcoming Hololens and Windows 10.
Microsoft has a Zacks Rank #3 (Hold). A couple of stocks in the same space that have been performing well are Dassault Systemes SA DASTY and Manhattan Associates, Inc. MANH, both sporting a Zacks Rank #1 (Strong Buy).
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