In Q4 2009 the Server and Tools division had a revenue of 3.5 billion, bigger than their Client division, their online services or their entertainment devices.
.NET is one of their best products. It's one of the few reasons developers might develop for Windows Mobile 7. It's the single reason I actually thought about deployment on Windows servers.
With a single platform you can target the web, desktop clients (even clients running on Mac OS X / Linux), rich intranet web apps (Flex-like) or mobile apps (Silverlight has been released for Symbian, WinMo7, MeeGo and probably Android following).
Getting rid of .NET could be the stupidest thing they ever did, and probably the last nail in their coffin.