Satya Nadella, Microsoft's new CEO, implied in his first-vision statement that more engineering and organizational changes are needed to turn the company around.
In a memo written and distributed on Friday, Nadella wrote that Microsoft will be shifting its focus from devices and services to productivity, mobile, and cloud.
"Over the course of July, the senior leadership team and I will share more on the engineering and organization changes we believe are needed," Nadella wrote in the memo. "Nothing is off the table in how we think about shifting our culture."
Nadella's appointment as CEO in February saw him signaling on producing software to rival that of Apple's iOS and Google's Android. He also discussed prioritizing mobile and cloud products and shifting away from Microsoft's core business of software and personal computers.
In a pledge to modernize the company's engineering process, the CEO is also envisioning the company's operating system (OS) as a cloud-based one that comprises Azure, its cloud hosting software. He also sees Windows, the company's OS on other devices including Microsoft's own hardware products.
According to sources of Bloomberg, when the company acquired Nokia's handset business in September, it pledged $600 million in annual savings for 18 months. The savings might be due to the possible job cuts to streamline the overlapping parts of the two companies.
Sources added that the job cuts are about to happen from Nadella's engineering re-organization. This is because new methods of software development have the developers themselves as testers for bugs and other problems. This requires lesser people than the traditional system in which teams of engineers involve program managers, developers, and testers.
Nadella declined to comment about the job cuts but promised to provide more details regarding the implications of his latest memo when the company reports its fiscal fourth-quarter earnings.
But Wall Street predicted that Microsoft will make its first major layoffs since 2009 though analysts were uncertain how many from its current 127,000 employees would lose their jobs.
"With recent chatter on the Street about potential head count reductions at Microsoft it was important for Nadella to be visible and set an optimistic tone heading into the next few months, especially on the heels of the Nokia integration," said Daniel Ives, an analyst at FBR Capital Markets, to Reuters.
