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Microsoft CEO Satya Nadella signals changes; layoffs seen likely

Microsoft CEO Satya Nadella gestures during the keynote

Microsoft CEO Satya Nadella gestures during the keynote address of the Build Conference in San Francisco on April 2, 2014. Photo Credit: AP / Eric Risberg

Microsoft Corp.'s Satya Nadella unveiled his first vision statement as chief executive, saying that more engineering and organizational changes are needed as he attempts to turn the software maker around.

Nadella's memo didn't address the prospect of layoffs, yet people familiar with the CEO's thinking said reductions will probably happen. The Redmond, Washington-based company is shifting its focus from the devices and services strategy that former CEO Steve Ballmer reorganized the company around last July and is honing in more on productivity and mobile and cloud products, Nadella wrote in the memo yesterday that was distributed to employees and posted on the company's website.

"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. "Nothing is off the table in how we think about shifting our culture."

The memo is the most comprehensive statement from Nadella about Microsoft's direction since he was appointed CEO in February. Since then the CEO has made several appearances at company and technology events to discuss the priorities of 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 Inc.'s iOS and Google Inc.'s Android and has shuffled management in areas like marketing, business development and the Xbox game console.

When Microsoft agreed to acquire Nokia Corp.'s handset business in September, the software maker pledged $600 million in annual cost savings for 18 months after the deal closes. Meeting that commitment will probably involve job cuts in areas where the two companies overlap, said the people familiar with Nadella's thinking, who asked not to be identified.


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