The job cuts are, essentially, rinsing the company of almost all of its obligations towards the smoldering remains of Nokia. Microsoft went to pains to state that the firm's Finnish sales division is protected, with the cuts entirely focused on Microsoft Mobile Oy. As CEO Satya Nadella says, the company is focusing its phone efforts where it has "differentiation -- with enterprises that value security, manageability and our Continuum capability."
When Microsoft sold off its feature phone business, it put out a weirdly-worded statement that only affirmed a commitment to "support" Windows Phone devices. The implication being that it was done actually building handsets itself, and will instead let third parties like Acer, HP and VAIO take over. Alternatively, it's rumored that Lumia as a brand is done, and the company will instead build a mobile device from its more successful Surface division.
"This in fact describes what we are doing (we're scaling back, but we're not out!), but at the same time I don't love it because it lacks the emotional impact of this decision."
Recode has published a copy of the internal memo, in which Terry Myerson explains that the company is scaling back, but is refusing to abandon mobile altogether. He also mentions that Microsoft will continue to "develop great new devices," although that's no indication that it'll manufacture them off its own back. A bigger part of the firm's focus, however, will be to "embrace other mobile platforms with our productivity services," or getting its apps and services available on Android and iOS devices.