Microsoft (MSFT) is reportedly planning its biggest round of job cuts in five years. The action will be a result of implementing a more focused strategy and also integrating Nokia's handset unit, according to a Bloomberg report. Microsoft bought Nokia last year for $7.2 billion,
A Microsoft spokesperson said that the company "is currently not commenting on this speculation reported by Bloomberg."
This is a difficult time for the software giant as it tries to remain relevant while its customers increasingly turn to mobile devices. Microsoft's dominance of computing is tied to the PC -- through operating system Windows and workplace software suite Office. The company has made some significant strategic shifts, offering more support for client platforms from Apple (AAPL) and Google (GOOG) to run its cloud-based services, including Office productivity software.
The potential for cuts was hinted at last week in a memo from CEO Satya Nadella. He said that Microsoft needs to embrace a "mobile-first and cloud-first world" and that the prior focus on becoming a "devices and services" company now needs adjustment.
Instead, Microsoft will attempt to become a "productivity and platform company" and position itself as a way to "harmonize the world's devices, apps, docs, data and social networks."
These are fundamental and, ultimately, massive changes that Nadella envisions, and they have to extend to the structure of the company. "Any strategy gets eaten for lunch if you don't have a culture that backs it up," he told the Seattle Times. "The main call here is: 'Let's not get caught up in any past dogmas in terms of how work gets done. I want us to be as innovative about processes as we are about the innovations themselves.'"
In the past, Microsoft's biggest weakness was a culture that put existing Windows and Office sales ahead of anything else. That is a big reason why the company fell so far behind in mobile.
A cultural change almost always means some significant personnel changes. Planned staff reductions reportedly will be in engineering and marketing. The question is whether existing Microsoft personnel or those from Nokia will dominate. Nokia's culture also has presented significant challenges to innovation and growth.
Complicating the picture is the issue of markets. Samsung's recently announced results showed signs of a bigger mobile industry slowdown. Concerns over potential organizational deadweight could also be driving an interest in reducing headcount.