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Finnish government criticizes Microsoft for job cuts, 'broken promises'

TechnologyMay 26, 2016 08:10PM ET
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© Reuters. General view of Microsoft Corporation headquarters at Issy-les-Moulineaux, near Paris

HELSINKI (Reuters) - The Finnish government on Thursday criticized Microsoft Corp (NASDAQ:MSFT) for its latest job cuts in the Nordic country, saying it had failed to keep promises made two years ago of making Finland a hub and keeping research and development jobs.

Earlier this week Microsoft said it would cut up to 1,850 jobs, 1,350 of them in Finland, in a move essentially seen as putting an end to the company's development of new phones.

Microsoft said it would continue to develop the Windows 10 platform and support its Lumia smartphones, but gave no comment on whether it would develop new Windows phones.

Microsoft bought the troubled phone business in 2014 from Nokia (HE:NOKIA), Finland's biggest company. Initially, the company also talked about creating a data center in the country.

"I am disappointed because of the (initial) promises made by Microsoft," Finance Minister Alexander Stubb said in a parliament plenary.

"One example is that the data center did not materialize despite the company's promise."

The decline of Nokia's former phone business and the lack of substitute jobs is the main reason for Finland's current economic stagnation.

The government said it would have 'serious talks' with Microsoft over how the company could help those laid off to find new jobs.

"The company must bear as big a responsibility as possible over what they have done by laying off people," said Employment Minister Jari Lindstrom.

Nokia dominated around 40 percent of the world's mobile phone industry in 2008 before it was eclipsed by touch-screen smartphones made by Apple (NASDAQ:AAPL) and Samsung (KS:005930).

As a result, Nokia and Microsoft slashed thousands of Finnish jobs over the past decade. The global market share of Windows smartphones fell below 1 percent in the first quarter of 2016, according to research firm Gartner.

Remaking Microsoft, known primarily for its software, into a more device-focused company was a hallmark of previous chief executive Steve Ballmer. Ballmer agreed to buy the phones business in 2013 for about 5.4 billion euros, but he was replaced by Satya Nadella before the deal was closed.

Nokia, for its part, was hailed on Thursday for its successful moves to sell the phones and restructure into a global leader in the telecom network equipment industry.

"(Nokia board chairman Risto) Siilasmaa should be given a medal. The Microsoft deal can be considered as one of the best in Finnish industrial history," Arno Ahosniemi, editor-in-chief at business daily Kauppalehti, said in a column.

Finnish government criticizes Microsoft for job cuts, 'broken promises'

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