(Bloomberg) -- Microsoft Corp., which is eliminating 10,000 jobs and trimming some of its hardware lineup, will reduce its HoloLens goggles business as it scales back work on a headset for the US Army that Congress declined to fund this year, according to people familiar with the matter.

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The software maker will take a $1.2 billion charge in the second fiscal quarter related to the overall job cuts and “changes to our hardware portfolio,” Chief Executive Officer Satya Nadella said Wednesday in a memo. Some of those changes relate to the HoloLens goggle and the Integrated Visual Augmentation System, or IVAS, being designed for the Army, said the people, who asked not to be identified because the plans are confidential.

Workforce reductions began Wednesday in Microsoft’s mixed-reality group, which makes HoloLens and IVAS, said one of the people. Microsoft plans to complete the entire 10,000 layoffs by the end of March. The company declined to comment on the actions affecting the HoloLens group.

Microsoft won’t be getting more orders for its combat goggles anytime soon after Congress earlier this month rejected the US Army’s request for $400 million to buy as many as 6,900 of them in the current fiscal year. The rejection of the request, in the $1.75 trillion government funding bill approved in December, reflects concern over field tests of the goggles, which are adapted from Microsoft’s HoloLens headsets. The tests disclosed “mission-affecting physical impairments,” including headaches, eyestrain and nausea.

It’s the latest setback for the company’s troubled HoloLens project, which was unveiled with much fanfare and enthusiasm in 2015 but has struggled to find customers. The Army deal, initially announced in 2018, by 2021 was set to run five years, with the option of five more years, and a maximum value of almost $22 billion. Instead, the project has been beset by delays related to the product and federal funding. The goggles are taking longer to get up and running and the project may never reach the hoped for total value, one of the people said.