Submitted by Microsoft is signalling the end of its Nokia experiment today. After acquiring Nokia’s phone business for $7.2 billion two years ago, Microsoft wrote off $7.6 billion last year and cut 7,800 jobs to refocus its phone efforts. Microsoft is now writing off an additional $950 million today as part of its failed Nokia acquisition, and the company plans to cut a further 1,850 jobs. Most of the layoffs will affect employees at Microsoft’s Mobile division in Finland, with 1,350 job losses there and 500 globally. Around $200 million of the $950 million impairment charge is being used for severance payments.
Everything about this entire deal needs to be investigated for all kinds of shady practices. My gut is telling me there’s a bunch of people that perhaps ought to be in jail on this one. Meanwhile, this is absolutely terrible for all the people involved. I’ve got the feeling thousands of people’s jobs have been used as a ball in a very expensive executive game.
Luckily, the remnants of Nokia in Finland seem to be doing well, so that’s at least something, and in case you’ve got a hunkering for the good old days: there’s a video out of Nokia Meltemi on a device called the Clipr – a very rare look at a Linux-based mobile operating system Nokia was developing around 2012.
Explain your comments please.
I second that. On what basis do you arrive at the opinion that a bunch of people should be jailed over this failed venture.
Do the words ‘Rape and Pillage’ not mean anything to you?
IMHO, a certain CEO engineered the demise of the company while trousering a geed few millions for doing that.
Ok, so Nokia was not on the ball when it came to the arrival of devices like the iPhone but there is no doubt in my mind that they could have survived without the MS carrot.
Just my 2c
yes, they do and they mean something quite different to anything involved in this case.
Why is there no doubt in your mind about that? Nokia not being on the ball? They were dying quicker than BlackBerry was dying. And we can all agree that Blackberry didn’t survive so why would Nokia?
I would say that Microsoft is actually footing the (10 billion) bill for the transition that Nokia is now seemingly successfully making.
“During Elop’s tenure, Nokia’s stock price dropped 62%, their mobile phone market share was halved, their smartphone market share fell from 33% to 3%, and the company suffered a cumulative ^a‘not4.9 billion loss.[28]”@Wikipedia
Yeah, this is a transition, right? How can you call him knowledgeable with such a pedigree? I am not saying that he was evil, probably he was just simply dumb, and his obligations to Microsoft led to the demise of Nokia as a phonemaker. I wonder if there will be anyone else who can top him as the worst CEO of the decade.
I am not saying that the direction before him was good, but when they appointed him, and after the Burning Platform Memo, and the choice of an unproved OS on the market made it clear to anyone with a sane mind that for Ellop the success of Microsoft was more important than the success of Nokia.
Nokia left the phone market where it failed hard and Microsoft paid the bill. From the perspective of the now again profitable and healthy Nokia it was a good deal.
Edited 2016-05-26 11:46 UTC
The problem is not with the sell, but with the road that lead there. What people question is that Ellop looked at Microsoft interest first, Nokia second, and people lost their investment during his tenure, because of that. If there is evidence that the decisions they made during his tenure was not in the best interest of Nokia and it was influenced by Microsoft, and this was not communicated to the shareholders, then that can be a criminal case.
Those are a whole bunch of ifs without anything solid to back it up.
Microsoft needed a hardwaremaker, Nokia needed an OS and development tools. It seemed like a match made in heaven but it turned out the competition was too mighty. They tried, they lost.
Microsoft is surviving because they have many other business.
Nokia is surviving because they got Microsoft to take all their dirt and pay the final bills. They can now focus and try to reinvent themselves on the non-user-facing networking that they are good at.
For some it was a match made in heaven, for many it was a match made in hell.
I didn’t mind that they start making Windows phone, but making Windows phones exclusively sounded like a stupid idea, and look how it turned out. The same for the buyout of Nokia phone making departments. It did not make any sense, it sounded like a good way to make sure that noone will make MS phones, and exactly that is what happened.
Elop didn’t cause any of the trouble at Nokia, but to be fair nothing he did helped to get them out of the trouble either. You must really believe in some kind of conspiracy when you say that Elop had obligations to Microsoft. As for worse CEO’s…how about the guy before Elop that managed to turn Nokia from the powerhouse that it was into the problems it had when Elop came in and was face with the mess? (https://en.wikipedia.org/wiki/Olli-Pekka_Kallasvuo). Also, every CEO of Yahoo and HP (http://www.foxbusiness.com/features/2015/12/30/worst-ceos-2015.html)
I call Elop knowledgeable because he always presented the products as if he had personally developed them. He also seemed to know extremely well about everything happening in the market. Calling someone like him dumb makes you look dumb yourself. A small example: https://www.youtube.com/watch?v=8aecpw3dY9w
From your own source about how badly Elop screwed up: In the book The Decline and Fall of Nokia, author David J. Cord firmly rejects the idea that Elop was a Trojan Horse. He claims that all of Elop’s decisions were logical when they were made, and he also cites the testimony of other Nokia executives who were part of those decision-making processes.[47]
Elop was given an impossible task, tried what he thought would work….and failed.
Edited 2016-05-26 13:27 UTC
Would upvote this if I could. It’s silly people think there’s a conspiracy/criminal case here.
I am not arguing that the performance during Olli-Pekka_Kallasvuo was better, I argue that Elop was anything but knowledgeble.
Also obligations can mean a lot of things, not necessarily any formal agreement.
And yeah, I am quite confident about the dumb part. If you put your trust in OS/technology which had 0% marketshare, you are exactly that. Microsoft released 3 incompatible OSs in five years, and if you put your company’s salvation in a single product that has nothing but promises, well, I call a person like that dumb.
Which 3 incompatible OSs would that be? There was a break between 7 and 8, but 8 to 8.1 and now 10 are compatible.
Also, which OS/technology should they have used according to you? Their own Symbian was clearly not the answer, Their own OS-attempts all had 0% marketshare and nothing but promises and were a major development mess, iOS doesn’t get licensed, BlackBerry was their major competitor (at least in Nokia’s mind) so that only left Android.
For some reason you want to hate on Elop and not on the previous management that made all the wrong decisions at the time were turning Nokia around was still possible. The reality is that Nokia was an oiltanker that didn’t see the icebergs and couldn’t turn itself around…and actually nobody could. It is a wonder that they managed to survive the way they did.
The 3rd OS was the 6.x line.
And yes, Android was an option, but they never lived with that. I don’t want to hate Elop, I don’t have a reason to, but just look at Apple to see what the right CEO can do with the company. Even with the shitty original iMac they turned around their finances, and you can’t compare the situation between Apple in 1998 and Nokia in 2010, because Nokia was in a way better position. All what they had to do is to release a good Android phone – I stated this in 2010, and I state it now.
The turn around of Apple is a miracle like no other. And most of it didn’t happen because they turned around their existing business but because they found entirely new business. Comparing anything with that and calling someone dumb or criminal when they don’t match up is ridiculous.
I would be interested to see a post from you from 2010 where you said “go Android”. At that time Android was a complete mess. Nobody inside Nokia was ready to swallow it’s pride and go with a non-Nokia OS.
Well, there was almost 6 years between 6 and 8 and at that time all OSs were incompatible with what came a couple of years before. Both because of hardware and software changes. Constant reinventions were the norm instead of the evolutionary pace we have now.
And the choice of Windows 10 as a smartphone OS is a logical choice at that time? Given that there are already competing in house OS that can compete with Android and iOS?
The inhouse OS’s weren’t ready and still aren’t ready. Windows Phone 8 was a logical choice with a giant like Microsoft behind it and a bag of money that was transferred to Nokia instead of a bag of money that had to be put up by Nokia to develop their own OS
(and of course you are talking about WP8, not WM10)
THAT, ceo…
But no share holder can allegate dementia. He just personalized, physicalized a shared will of scavenging a seriously hurt Company.
I knew it when he took his first actions. Like testifying a public execution. Sad spectacle.
There are women executioners, also.
Two drowning men fail to save each other. That’s all it is. When disruption happens, especiually in the tech wolrd, it can happen very suddenly and always comes from an unexpected direction. This often means incumbents are dazed and confused, and hence do stupid things driven by disoreinated desperation. If they have enough money they can do spectacular and very expensive stupid things.
It’s never fun to lose your job, but let’s not paint it too dramatically, please!
On average these people will pocket more than 100.000 dollar severance pay, each.
Not bad for working on a failed project (and after years of having been paid while they were failing!).
Certainly much, much better than working for a company that actually goes bankrupt…
I don’t know how it works in Finland (maybe the government has rules about this), but in the US (typically) the vast bulk of the severance pay would be limited to executives, and possibly some department heads and highly valued engineering/programming staff that actually managed to negotiate for it. Everyone else (at best) would get 1-2 weeks of base pay and a push out the door.
While your technically correct about the average, I would wager less than 100 people are getting the bulk of the total severance pay – everyone else will get nothing or very little. Its not at all uncommon for an executive severance package to be equivalent to 2-3 years of pay – I guarantee the rank and file are not getting anywhere near 100k each.
Yeah, that’s usually what happens you live in a third world country, and are proud of it. You get ripped off for the benefit of the rich and wealthy, and get to go vote for a billionaire to make matters even worse.
Hieper,
That’d be nice, is this for real? What’s your source?
The only information I found is from a previous round of Microsoft (former Nokia employee) layoffs in China where employee severance consisted of a Lumina 630.
http://www.marketwatch.com/story/microsoft-tries-to-ease-pain-of-ch…
Of course China is worlds apart from Finland, those employees could be entitled to more severance. I have a question for anyone in Europe: are employees typically entitled to severance pay?
In the US where employment is “at will”, there’s no law requiring companies to pay severance at all.
http://employment-law.freeadvice.com/employment-law/firing/severanc…
Just as with pensions, there are older employees who may be grandfathered into a severance package from a time when companies were being much more generous, but today I wouldn’t assume for severance to be available at any company except possibly to high level corporate officers.
It’s the new employees who really get the shaft because they don’t get the benefits that older employees are grandfathered into. Companies are even making lump sum payments to older employees to give up their pension rights.
http://money.usnews.com/money/retirement/articles/2012/06/07/should…
Two different sources online both agree that Finish law doesn’t REQUIRE severance pay. None at all, no matter the length of employment. So it would come down to a matter of the contracts the employees had. If it’s not spelled out in their contract, they’re at the tender mercies of MS, and MS firmly believes that mercy is for the weak.
In Spain, contracts starting after 2010 entitle you for severance to one month’s pay per year worked, up to a maximum of one year’s pay; before 2010, it used to be two months, up to two year’s. Spain is not particularly generous with workers, for European standards at least, I am pretty sure that Finland is much better.
It really depends on their contracts and who they are working for officialy: “Microsoft”, or a special sub-company.
If you are working for a company and have an unlimited contract (which most Finish Nokia Engineers would have, but most Vietnamese phone assemblers wouldn’t have) you cannot just get fired even if your department is going to be cancelled. (Unless the continuity of the entire company is in danger, like in a bankruptcy procedure). Your employer has to find an alternative working spot for you. Most of the time that isn’t possible or isn’t what the employer wants because it would require major reschooling or relocation. So in those situations a compromise deal is made that mostly comes down to “here is a bag of money and some support in finding a job elsewhere as long as you quit your job right now”
Microsoft specifically stated that 200 of the 950 million is for these kind of procedures (which is the 100.000 per person on average)
“unlimited” contract???? Uh?
Well, I don’t know what such a contract is called in Finland or wherever you are from. “Fixed” contract? “Lifetime” contract?
That makes more sense. A contract is literally the codification of limits
So does this mean Continuum the new nice feature is going away ?
No, not at all. Continuum is a feature of certain Qualcomm chipsets that will continue to be sold and supported. Other OEMs can (and have) made phones with this hardware and I am sure Microsoft is working on making some other kind of devices that include Continuum.
It is also part of Windows 10 Mobile and UWP that will both keep being developed. Continuum is getting a few new features in the 1607/July/Redstone1/Aniversary Update
Somehow this article lacks a link, it looks like the the original source is http://www.theverge.com/2016/5/25/11766354/microsoft-terry-myerson-… .
Still, I would like a bit more context: 1.850 heads now on top of the 7.800 last year… from a total of how many?
There were roughly 25.000, 18.000 (manufacturing) were dropped almost immediately and the rest in the next and this round.
I think it is safe to assume that by now the Surface/hardware team and/or the Windows team have absorbed the absolutely best people and Nokia/Lumia is entirely gone from Microsoft
As usual, if most of them have left gradually they’d probably have had better chances. If in the other case if you’re a part of a couple of thousand of similar (possibly narrow) spec engineers are dropped into the job market at one time, one place you’re seriously f*cked.
Not only only fraction will find a new job around forcing most to leave the country but the supply will overwhelm demand for many months bringing the salaries to the bottom.
That’s a material loss for Finland too.
I hope these people are able to move on to new roles in new companies and pick them selves up from this.
This is Microsoft returning to being a hardware company. The Nokia takeover was an attempt to save Windows Phone, they never really wanted or needed a phone manufacturing branch. If they did, there were cheaper and better options out there!
I think you mean “This is Microsoft returning to being a SOFTware company”.
Windows 10 Mobile is pretty much alive and developing nicely as just another version of Windows 10. The last mobile hardware they made were the 550/650/950 6 months ago and we will not see anything else from them for another year.
That is Exactly what I meant to say! Maybe I needed more sleep today
http://www.osnews.com/permalink?464534
Wed 2nd Mar 2011…
How it is sad to see I was right…
As an European, I promise to buy a Nokia Phone just to react on this.
History tell me that there is a generalized lack of ‘know how’ on productive take overs.
Suspecting that a lot have to do with preemptively depreciating people and culture, instead of providing Them with the denegated support to rise over the blockades; advice to acknowledge additional choices.
Hubris?