Microsoft 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's handset unit and slims down the software maker.

The restructuring, amounting to about 14 per cent of its workforce, includes 12,500 factory and professional positions, the world’s biggest software maker said in a statement today.

The company did not give a country-by-country breakdown of where the cuts would be made.

However, the impact of the changes on its Irish operation, which employs 1,200 people, is understood to be minimal.

The job cuts are expected to be fully completed by June next year and will result in a pretax charge of $1.1 billion to $1.6 billion.

Mr 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 about 30,000 workers in April, bringing the total to about 127,100.

“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, who rates Microsoft stock the equivalent of a buy.

Last week, in his first mission statement, Mr Nadella said the 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 22nd.

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, Mr Ives said.

Reuters