In a decisive step to reshape its future, Microsoft has announced plans to cut up to 18,000 jobs approximately 14% of its workforce—over the next year. This sweeping move is aimed at streamlining operations following the company’s acquisition of Nokia’s devices business in April and reducing management layers to enhance efficiency.

The decision marks the boldest action yet under CEO Satya Nadella’s leadership, who succeeded Steve Ballmer in February. In an email to employees, Nadella stated the changes were critical for Microsoft to “become more agile and move faster.”

The cuts include about 12,500 professional and factory jobs, primarily from the Nokia division. Microsoft anticipates charges of $1.1 billion to $1.6 billion over the next four quarters, with $750 million to $800 million allocated for severance and related benefits.

This move aligns with Nadella’s broader vision to transition Microsoft’s focus from traditional PC software to cloud computing and services. The company has been emphasizing products like Office 365, its cloud-based productivity suite, to stay competitive in a rapidly evolving tech landscape.

Last week, Nadella signaled this shift in a blog post, emphasizing the need for Microsoft to “change and evolve” its culture for a “mobile-first and cloud-first world.”

More details on the company’s direction are expected when Microsoft reports its fiscal 2014 results next week.

Meanwhile, Microsoft’s stock reflects investor confidence in the new strategy. Shares rose $1.35, or 3.1%, to $45.43 in premarket trading, contributing to an 18% increase since the start of the year.

As Nadella steers the company toward a leaner, more focused future, this restructuring marks a significant turning point in Microsoft’s journey to adapt and thrive in the modern tech ecosystem.