Report: Job cuts planned at Microsoft

Microsoft is reportedly planning significant layoffs as it integrates Nokia's handset unit, which it formally acquired earlier this year.

According to Bloomberg, which cites "people with knowledge of the company's plans," the layoffs could top the 5,800 job cuts in 2009, which were the largest ever for Microsoft.

The cuts would focus on positions that overlap with the Nokia business, as well as positions in marketing and engineering, reads the report.

Timing of the layoffs are not surprising, says Ross Rubin, principal analyst at Reticle Research in New York. Microsoft CEO Satya Nadella, who replaced longtime leader Steve Ballmer in February, "has had a few months now to review what's going on now inside the company, and we recently saw a memo outlining what the priorities should be. That can often be a prelude to shifting around different businesses."

Last week, Nadella sent a memo to employees pushing his vision for the company, which will focus more heavily on mobile and cloud computing.

"When we think about what are the assets that Microsoft is trying to deploy to gain strength in mobile, certainly one is productivity, the Office franchise, and Skype is an asset that has a consumer base and so is Xbox," Rubin says.

As for dramatic changes at the company, Rubin says Nadella hasn't made clear what those might be. But one move could be to position Microsoft's Surface Pro 3 tablets for higher-end productivity uses, he says.

Last year, Microsoft announced its acquisition of Nokia for more than $7 billion, and finalized it in April. Now, Nadella must prove he can fit Nokia into Microsoft's broader core strategy, says Daniel Ives, senior analyst with FBR Capital Markets.

"They need to do cost-cutting to stem some of the bleeding from the Nokia acquisition, especially over the next three or four quarters," he says.

Investors might see the layoffs as a good sign, he says. "It shows that (Nadella is) looking critically at the business and likely reducing inefficiencies," Rubin says. "Often it is something that occurs as a company prepares a new path for growth."

Ives says job cuts are part of Nadella's larger vision to sharpen Microsoft's focus. "Nadella is cost conscious," Ives says. "He realizes there needs to be a leaner, more innovative Microsoft."

Follow Brett Molina on Twitter: @brettmolina23.