Microsoft readies job cuts in Nokia handset merger: report

Microsoft is reportedly planning the biggest round of job cuts in five years as the firm pushes ahead with integrating and streamlining Nokia Oyj's handset unit.

The Redmond giant's job cuts could be announced as soon as this week, according to Bloomberg. The publication says that the axe is likely to fall on employees who work in overlapping Nokia-Microsoft divisions, as well as marketing and engineering. Software testers and marketing for businesses including the Xbox team may be impacted.

Microsoft accounts for approximately 127,000 employees since taking on Nokia's handset business in September last year, which added roughly 30,000 staff to the roster. The buyout was agreed upon for $7.2 billion, and as part of the acquisition, Microsoft announced plans to make annual cost savings of $600 million in the 18 months after the deal closed. As a result, the PC maker's CEO Satya Nadella was expected to make a number of job cuts to reach this goal.

Last week, a memo was sent to Microsoft employees by the chief executive, where he promised to "flatten the organization and develop leaner business processes."

Sources close to the matter say Microsoft's restructuring could be the largest in the company's history, and will likely top 5,8000 job cuts in 2009. The last time Microsoft issued a round of job cuts was at the beginning of the recession, and roughly five percent of the firm's workforce were taken off payroll.

Microsoft is due to report Q4 earnings on July 22, and we are likely to hear more on this date.

Separately, Bloomberg also reports that Microsoft is in talks to purchase security firm Aorato, a developer of firewall software. However, talks are at an early stage and Aorato may also be holding discussions with other companies.