Nokia phones ran a wide array of operating systems that were not helpful to Microsoft's Windows brand. The Asha operating system, for instance, lacked features like the ability to use mobile versions of Office software or even GPS mapping.
Soon after the deal was announced, Nokia's overall handset sales plunged 29 percent in the final quarter of last year, even as its high-end Lumia devices grew quickly.
The Nokia purchase "is not a deal that (Nadella) agreed upon or negotiated or perhaps really wanted," said Scott Kessler, senior equity analyst at S&P Capital IQ. "Secondly, it seems that the market has changed pretty significantly over the last year ... pretty traumatic cuts seem probably somewhat appropriate at this point."
In a letter to employees, Executive Vice President Stephen Elop said the company will drive sales of its Windows Phone by targeting the lower-price smartphone market with its Lumia devices.
A separate memo by a Microsoft executive in India posted by the BGR website said the company will stop engaging with developers on new apps for Nokia X, Asha and Series 40 phones, but maintain support for customers who own the phones.
In a blog post a week ago, Nadella hinted at the move, saying Microsoft had to "change and evolve" its culture for the "mobile-first and cloud-first world."
Nadella planned to provide more details when Microsoft reports fiscal 2014 results on Tuesday. He will also address staff Friday at a monthly question-and-answer session.
Shares of Microsoft closed up 45 cents, or 1 percent, to $44.53 on Thursday. The stock is up about 19 percent since the start of the year.
AP Business Writer Mae Anderson and AP Television Producer Luke Sheridan in New York contributed to this report.
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