Microsoft seen planning biggest round of job cuts in five years

Satya Nadella
Fortune Brainstorm TECH July 14th, 2014 Aspen, CO 5:30 PM BIG DATA, BIGGER CHALLENGES Satya Nadella, CEO, Microsoft
Interviewer: Walter Isaacson, CEO, The Aspen Institute Photograph by Kevin Moloney/Fortune Brainstorm TECH
Kevin Moloney—Fortune Brainstorm TECH

Microsoft Corp. (MSFT) employees may feel the harsh realities of Satya Nadella’s vision for the company as early as next week, with the company set to announce its biggest round of job cuts in five years.

Citing ‘people with knowledge of the company’s plans’, Bloomberg reported Tuesday that the cull may end up being the biggest in the Redmond, Wa.-based company’s history, topping the 5,800 jobs it cut in 2009, as the financial crisis took its toll on the economy. The company currently employs over 125,000 people.

It said the cuts would probably be concentrated in areas such as Nokia and the divisions of Microsoft that overlap with it, as well as in marketing and engineering. When Microsoft bought the mobile phone business of Finnish-based Nokia Oyj in September it had promised to find $600 million in annual cost savings within 18 months.

Chief executive Satya Nadella had skirted the issue of job cuts in a recent interview with the Wall Street Journal, and had made no mention of them in a wide-ranging appearance at Fortune’s Brainstorm Tech conference in Aspen Monday.

However, he has warned of the need for the need for a profound cultural change at the company to make it fit for a world that increasingly lives by mobile devices, rather than the PCs where Microsoft has traditionally been dominant.

Bloomberg said the cuts may also affect software testers and the marketing departments of businesses such as the global Xbox games console.

Nadella had sent out a slightly hedged message about Xbox at Brainstorm Tech, saying it wasn’t exactly a core business, but also that “it isn’t far” from the core.

“We can do a few more things than the core. But the point is, you’ve got to have a culture to do it,” Nadella said.

Microsoft is due to report its fourth-quarter earnings July 22.

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