Microsoft confirmed it will cut up to 18,000 jobs over the next year, part of the tech titan's efforts to streamline its business under new CEO Satya Nadella.
In a statement released Thursday, Microsoft says about 12,500 of the professional and factory positions will be cut as part of its $7.2 billion acquisition of Nokia's handset business.
"My promise to you is that we will go through this process in the most thoughtful and transparent way possible," said Nadella in a memo to employees.
Microsoft has confirmed it will cut up to 18,000 jobs over the next year, in part to make the company more competitive.
Nadella, who replaced Steve Ballmer in February, says the "vast majority" of employees affected by layoffs will be notified within the next six months. They will also earn severance and job transition help in many locations. All cuts will be completed by next June.
The layoffs by Microsoft -- which employs 125,000 people -- are the company's largest ever. The acquisition of Nokia's handset business in April added 25,000 people to Microsoft's payroll.
Daniel Ives, analyst with FBR Capital Markets, says the "larger than expected" layoffs hints at Nadella's plans to simplify Microsoft's infrastructure.
"Under the Ballmer era, there were many layers of management and a plethora of expensive initiatives being funded that has thus hurt the strategic and financial position the company is in, especially in light of digesting the Nokia acquisition," Ives says.
"Nadella is using today as an opportunity to make sure that Microsoft is ready and well positioned to embark on its next chapter of growth around mobile and cloud," Ives says.
Microsoft expects to incur pre-tax charges as high as $1.6 billion over the next four quarters, which will include $750 million to $800 million for severance and related benefit costs, and $350 million to $800 million of asset-related charges.
Shares of Microsoft were up 3.3% at $45.55 in pre-market trading. Overall, investors have been pleased by Nadella's performance. Microsoft stock surged 25% since Nadella took over.
Last week, Nadella sent a memo to employees reinforcing his vision for a "mobile-first, cloud-first" world, focusing on unifying its software and hardware.
"Microsoft has a unique ability to harmonize the world's devices, apps, docs, data and social networks in digital work and life experiences so that people are at the center and are empowered to do more and achieve more with what is becoming an increasingly scarce commodity — time!" Nadella wrote.
Nadella has injected "a new sense of focus, energy and interest in what's going on at Microsoft," says S&P Capital IQ analyst Scott Kessler, citing Microsoft's deal with Apple to host productivity apps suite Office on the iPad.
"He's doing things the way he thinks they should be done," Kessler says. "If it means they're going to do a partnership with a former -- and you could argue current -- rival in Apple for the betterment of the business, then he's going to do it."
Gartner analyst Merv Adrian says Nadella recognizes Microsoft cannot operate with a "Windows first at all costs model" and has started shaping the company to thrive in a tech space with multiple platforms and devices. "It's been a very consistent delivery on the promises he's made so far," he says.
Microsoft is the latest tech giant suffering through a round of layoffs. In May, personal computer company Hewlett-Packard announced it would cut an additional 11,000 to 16,000 jobs as part of a massive restructuring. Earlier this year, IBM said it would take a $1 billion charge for "workforce re-balancing."
Chip maker Intel and network-equipment maker Cisco Systems both said in the past year they were cutting about 5% of their workforces.
Follow Brett Molina on Twitter: @brettmolina23.