Microsoft has offered more details on its Windows Phone division in a recent filing with the U.S. Securities and Exchange Commission. It reveals that internal hardware sales and revenue targets for the division were not met in the second half of its 2015 fiscal year, which was likely the biggest reason behind Microsoft's $7.6 billion write-down of the Nokia Devices and Services acquisition.
In Microsoft's annual Form 10-K filing with the SEC, which goes over the company's entire 2015 fiscal year financial numbers, it stated:
"In the second half of fiscal year 2015, Phone Hardware did not meet its sales volume and revenue goals, and the mix of units sold had lower margins than planned. These results, along with changes in the competitive marketplace and an evaluation of business priorities, led to a shift in strategic direction and reduced future revenue and profitability expectations for the business."
"As a result of these changes in strategy and expectations, we have forecasted reductions in unit volume growth rates and lower future cash flows used to estimate the fair value of the Phone Hardware reporting unit, which resulted in the determination that an impairment adjustment was required."
In addition to the write-down, Microsoft will also lay off 7,800 of its team members from now until the end of June 2016, mostly coming from its phone division. Despite these actions, company CEO Satya Nadella and other Microsoft executives says they are still committed to their phone business and that new flagship smartphones are due for launch later in 2015.