Microsoft on Thursday announced it plans to cut up to 18,000 jobs this year — its deepest-ever cuts — as the company looked to digest its Nokia acquisition and reposition itself for the future. 
 
 Following the Nokia acquisition, completed in April, Microsoft had roughly 127,104 employees, meaning the cuts could reduce nearly 15 percent of its workforce. 
 
 Shares of Microsoft rose 3 percent in morning trading on the Nasdaq. 
 
 Microsoft said the company is “moving now” on 13,000 of the job cuts, with the vast majority of the overall cuts coming in the next six months and fully implemented over the next 12 months. 
 
 Some 12,500 of the cuts are coming from the Nokia Devices and Services unit — roughly half that unit’s workforce. The company said it expects pre-tax charges over the next four quarters of $1.1 billion to $1.6 billion for severance and other costs. 
 
 The cuts are just the latest acknowledgement by Microsoft and new CEO Satya Nadella that the company is committed to making tough decisions to improve its position in the technology landscape. 
 
 “The first step to building the right organization for our ambitions is to realign our workforce,” Nadella said in a note to employees Thursday. “It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible.” 
 
 After years of being so dominant that it drew the ire of antitrust regulators, Microsoft now finds itself a distant third in the overall market for computing devices — PCs, phones and tablets. A telling slide at Microsoft’s partner conference last week noted that the company’s share of that broader computing market is just 14 percent. Nadella outlined a good chunk of his thinking in a 3,100-word memo last week in which he talked about the need for Microsoft to rethink both its corporate culture and the way it builds products. 
 
 “The day I took on my new role I said that our industry does not respect tradition — it only respects innovation,” Nadella wrote. “I also said that in order to accelerate our innovation, we must rediscover our soul — our unique core.” 
 
 The question for the company now is whether this round of cuts will help accelerate that change or merely instill additional uncertainty. 
 
 In one product detail, Nadella notes that the company will shift some of Nokia’s Android-based Nokia X line over to Windows-based phones. 
 
 Here’s Nadella’s full memo to staff: 
 
 From: Satya Nadella 
 
 To: All Employees 
 
 Date: July 17, 2014, at 5:00 a.m. PDT 
 
 Subject: Starting to Evolve Our Organization and Culture Last week in my email to you I synthesized our strategic direction as a productivity and platform company. Having a clear focus is the start of the journey, not the end. The more difficult steps are creating the organization and culture to bring our ambitions to life. Today I’ll share more on how we’re moving forward. On July 22, during our public earnings call, I’ll share further specifics on where we are focusing our innovation investments. The first step to building the right organization for our ambitions is to realign our workforce. With this in mind, we will begin to reduce the size of our overall workforce by up to 18,000 jobs in the next year. Of that total, our work toward synergies and strategic alignment on Nokia Devices and Services is expected to account for about 12,500 jobs, comprising both professional and factory workers. We are moving now to start reducing the first 13,000 positions, and the vast majority of employees whose jobs will be eliminated will be notified over the next six months. It’s important to note that while we are eliminating roles in some areas, we are adding roles in certain other strategic areas. My promise to you is that we will go through this process in the most thoughtful and transparent way possible. We will offer severance to all employees impacted by these changes, as well as job transition help in many locations, and everyone can expect to be treated with the respect they deserve for their contributions to this company. Later today your Senior Leadership Team member will share more on what to expect in your organization. Our workforce reductions are mainly driven by two outcomes: work simplification as well as Nokia Devices and Services integration synergies and strategic alignment. First, we will simplify the way we work to drive greater accountability, become more agile and move faster. As part of modernizing our engineering processes the expectations we have from each of our disciplines will change. In addition, we plan to have fewer layers of management, both top down and sideways, to accelerate the flow of information and decision making. This includes flattening organizations and increasing the span of control of people managers. In addition, our business processes and support models will be more lean and efficient with greater trust between teams. The overall result of these changes will be more productive, impactful teams across Microsoft. These changes will affect both the Microsoft workforce and our vendor staff. Each organization is starting at different points and moving at different paces. Second, we are working to integrate the Nokia Devices and Services teams into Microsoft. We will realize the synergies to which we committed when we announced the acquisition last September. The first-party phone portfolio will align to Microsoft’s strategic direction. To win in the higher price tiers, we will focus on breakthrough innovation that expresses and enlivens Microsoft’s digital work and digital life experiences. In addition, we plan to shift select Nokia X product designs to become Lumia products running Windows. This builds on our success in the affordable smartphone space and aligns with our focus on Windows Universal Apps. Making these decisions to change are difficult, but necessary. I want to invite you to my monthly Q&A event tomorrow. I hope you can join, and I hope you will ask any question that’s on your mind. Thank you for your support as we start to take steps forward in evolving our organization and culture. Satya 
 
 Update: Adds stock price. ||||| Microsoft Corp. (MSFT) said it will eliminate as many as 18,000 jobs, the largest round of cuts in its history, as Chief Executive Officer Satya Nadella integrates Nokia Oyj’s handset unit and slims down the software maker. 
 
 The restructuring, amounting to about 14 percent of its workforce, includes 12,500 Nokia factory and professional positions -- half the number of employees added in the acquisition. At Microsoft, cuts will be in sales, marketing and engineering. The reductions are expected to be completed by June 30, 2015, and will result in a pretax charge of $1.1 billion to $1.6 billion, Microsoft said in a statement today. 
 
 Nadella, who took over from Steve Ballmer in February, is retooling the company’s structure as it seeks to compete with nimbler rivals offering mobile and Internet-based software and services. He’s also working to wring a promised $600 million in annual savings from Microsoft’s Nokia deal, which added 25,000 workers in April, bringing the total to about 127,100. 
 
 Related: 
 
 “Microsoft needs to be a leaner tech giant over the coming years in order to strike the right balance of growth and profitability around its cloud and mobile endeavors,” said Daniel Ives, an analyst at FBR Capital Markets & Co. who rates Microsoft stock the equivalent of a buy. The cuts are roughly twice as big as Wall Street expected, Ives said in a note today. 
 
 Photographer: Andrew Harrer/Bloomberg An attendee tries on a Microsoft Corp. branded shirt during the Microsoft Worldwide Partner Conference in Washington, D.C., U.S., on Wednesday, July 16, 2014. Close An attendee tries on a Microsoft Corp. branded shirt during the Microsoft Worldwide... Read More Close Open Photographer: Andrew Harrer/Bloomberg An attendee tries on a Microsoft Corp. branded shirt during the Microsoft Worldwide Partner Conference in Washington, D.C., U.S., on Wednesday, July 16, 2014. 
 
 The shares rose 1 percent to $44.53 at the close in New York. They have advanced 19 percent this year. 
 
 Streamline Management 
 
 The company will start with 13,000 cuts today and the majority of eliminated workers will be notified in the next six months, Nadella said in an e-mail to employees. Microsoft will also have fewer layers of management and will make changes to its outside vendor staff, he said. 
 
 “The first step to building the right organization for our ambitions is to realign our workforce,” he wrote. 
 
 Last week, in his first mission statement, Nadella said the Redmond, Washington-based software maker needs to become more focused and efficient and requires changes to its engineering teams. He pledged updates on the new plans later this month, and said he would provide more details when the company reports earnings on July 22. 
 
 Microsoft investors are likely to view the cuts as a positive sign, illustrating that Nadella is trying to get costs and headcount under control and that he understands the challenges facing Microsoft, Ives said. 
 
 Photographer: Andrew Harrer/Bloomberg The Microsoft Worldwide Partner Conference in Washington, D.C., on July 16, 2014. Close The Microsoft Worldwide Partner Conference in Washington, D.C., on July 16, 2014. Close Open Photographer: Andrew Harrer/Bloomberg The Microsoft Worldwide Partner Conference in Washington, D.C., on July 16, 2014. 
 
 Earnings Growth 
 
 “We view this as another step in the right direction from the Street’s perspective,” he said in an interview. “Nadella is not wearing rose-colored glasses.” 
 
 The reductions may add 30 cents a share to Microsoft’s profit in fiscal 2016, estimated Kirk Materne, an analyst at Evercore Partners Inc., who rates Microsoft the equivalent of a buy. 
 
 The company has needed to cut costs. Analysts on average estimate that profit before certain items increased 1 percent in the fiscal year that ended last month, after a decline in fiscal 2013 and little growth the prior year. 
 
 Given the stock’s gains in recent months on optimism about Nadella’s plans, it’s time for the company to post earnings growth that validates that enthusiasm, said Brent Thill, an analyst at UBS AG, who recommends buying the stock. Microsoft spends far more on product development and research than rivals such as Apple Inc. (AAPL) and Google Inc. (GOOG) and gets a smaller return for that investment, he said. 
 
 “They have been spending on a lot of things that haven’t come to fruition,” he said. “The Nadella era will be about putting more money on bigger hits and not sprinkling a little everywhere.” 
 
 Mobile Focus 
 
 In appearances at company and technology events since he took the helm, Nadella has reiterated that the company’s priorities are mobile and cloud products, as he works to shift Microsoft away from its longtime core business of software for personal computers. Nadella has signaled a desire to produce software for rival operating systems, like Apple’s iOS and Google’s Android, and has shuffled management in areas like marketing, business development and the Xbox game console. 
 
 Photographer: Andrew Harrer/Bloomberg Satya Nadella, chief executive officer of Microsoft Corp., speaks during a keynote session at the Microsoft Worldwide Partner Conference in Washington, D.C. on July 16, 2014. Close Satya Nadella, chief executive officer of Microsoft Corp., speaks during a keynote... Read More Close Open Photographer: Andrew Harrer/Bloomberg Satya Nadella, chief executive officer of Microsoft Corp., speaks during a keynote session at the Microsoft Worldwide Partner Conference in Washington, D.C. on July 16, 2014. 
 
 While Microsoft has implemented smaller, intermittent job cuts in individual businesses -- for example, trimming a few hundred positions in advertising sales and marketing in 2012, and some marketing jobs across the company earlier that same year -- the 39-year-old company has only undertaken a companywide restructuring affecting thousands of workers once before, in 2009, at the start of the recession. Over the course of that year, the company cut 5,800 jobs, or about 5 percent of its workforce at the time. 
 
 Cost Savings 
 
 When Microsoft agreed to acquire Nokia’s device unit in September, the software maker pledged $600 million in yearly cost savings in the 18 months after the deal closed. While today’s layoffs are the company’s biggest ever, excluding the 12,500 positions being eliminated at Nokia, the 5,500 job cuts at Microsoft are smaller than those in 2009. 
 
 Microsoft’s engineering teams have traditionally been split between program managers, developers and testers. Now, with new cloud-based methods of building software, it often makes sense to have the developers test and fix bugs instead of a separate team of testers, Nadella said in an interview last week after releasing his memo. 
 
 Nokia Shift 
 
 The Nokia business, now part of Microsoft’s devices group, will also undergo some product changes as Microsoft ends output of phones running Google’s Android operating system and targets the “more affordable smartphone segments,” wrote devices group chief Stephen Elop, formerly the CEO of Nokia, in an e-mail posted on Microsoft’s site. 
 
 Microsoft will switch the Nokia X, which uses Android, to the Windows Phone operating system to broaden its products in the cheaper smartphone category. It will also align future high-end smartphone releases with major products from Windows and Microsoft’s applications team, Elop said. 
 
 The company will also combine what had been two units at Nokia -- Smart Devices and Mobile Phones -- into one under executive Jo Harlow. Phone engineering will be based in Salo, Finland, for high-end devices, and Tampere, Finland, for cheaper ones. Engineering work in Oulu, Finland, will be scaled down. 
 
 Engineering in Beijing and San Diego will see cuts, and phone production will be focused mainly in Hanoi. Nokia will shift repair and manufacturing operations from Hungary. The cuts may affect 1,100 employees in Finland and about 1,800 in Hungary, Microsoft said. 
 
 Elop’s memo was derided by publications from New York magazine to the Guardian, which titled a blog “How not to cut 12,500 jobs,” for starting with the greeting “Hello There,” and failing to get to the job cuts until the 11th paragraph of 14. 
 
 TV Programming 
 
 In the Xbox business, the company will shut down an ambitious effort to create original television programming, just one month after the debut of its first show. The Xbox Entertainment Studio will close in coming months, Xbox chief Phil Spencer said in an e-mail to employees. 
 
 Nancy Tellem, the ex-CBS executive brought in to lead the effort two years ago, will stay on with some of her team to complete shows in production, such as a “Halo” series, the company said. Tellem was hired by former CEO Ballmer to draw more entertainment consumers to Xbox by getting into original programming, like Amazon.com Inc. and Netflix Inc. 
 
 As the technology industry increasingly shifts toward mobile computing and cloud-based services, other technology companies have also sought to keep up by streamlining and firing workers. Hewlett-Packard Co. in May disclosed 16,000 more job cuts after reporting an 11th straight quarter of declining sales, on top of 34,000 in staff reductions already announced. International Business Machines Corp. also started dismissing workers earlier this year as part of a $1 billion restructuring to help it adapt to the industry’s changes. 
 
 To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net 
 
 To contact the editors responsible for this story: Reed Stevenson at rstevenson15@bloomberg.net Jillian Ward, James Callan
– Microsoft has announced what will be the heftiest round of job cuts in its 39-year history: As many as 18,000 positions, or roughly 14% of its workforce, will go. The move follows the company's Nokia acquisition, which inflated its ranks to 127,104 workers. Re/code reports on the timeline: Microsoft is "moving now" on 13,000 cuts; the cuts should be fully completed by June 30, 2015, according to Bloomberg. About 12,500 positions will be deleted from the Nokia Devices and Services unit, roughly halving it. Bloomberg notes that Microsoft vowed to achieve $600 million in annual costs savings in the year and a half following the close of the deal, which happened in April. It anticipates charges of $1.1 billion to $1.6 billion over the next four quarters, which includes $750 million to $800 million for severance and related benefit costs, notes the AP. Re/code has CEO Satya Nadella's full memo to staff.