Microsoft (NASDAQ: MSFT) is reportedly planning its biggest round of job cuts since 2009, as a move to shed costs and integrate Nokia Oyj's (HEL: NOK1V) handset unit, Bloomberg reported Tuesday, citing unidentified sources.
The report of the lay-offs, expected to be announced later this week, closely follows a memo circulated among its employees Thursday by the company’s new CEO Satya Nadella, who took over from Steve Ballmer in February. In the memo, Nadella called for “reinventing productivity” and stated that he would provide more details after the company's quarterly earnings announcement scheduled for July 22.
Sources familiar with the company’s latest plans told Bloomberg that the impending restructuring could be bigger than the one in 2009 and that it might even be “the biggest in Microsoft’s history.” The company last undertook a significant overhaul in 2009, following the recession, when it cut 5,800 jobs, or close to 5 percent of its workforce.
The report also stated that the job cuts would probably be announced in areas that overlap with the recently-acquired Nokia handset division as well as in marketing and engineering.
Microsoft acquired the Finnish phone-maker’s handset business in a $7.2 billion deal in September 2013. Following the merger, it pledged to save $600 million in “annual cost synergies” within 18 months.
An unidentified source, speaking to Bloomberg, stated that saving $600 million in this timeframe would involve massive restructuring, and added that at least some of the job cuts would be in the engineering department of the software company, particularly among the ranks of software testers.
Microsoft currently employs over 120,000 people, including the 30,000 that were added from its acquisition of Nokia’s handset unit.