Microsoft is on the verge of announcing its biggest round of job cuts in at least five years, as the software giant looks to slim down its operations in the face of fierce competition from nimbler rivals such as Apple and Google.

According to a Bloomberg report the reductions will be in its Nokia handset business, as well as marketing and engineering divisions. Some of the marketing job losses are expected to hit Microsoft's European Xbox team based in Reading. Anonymous Microsoft executives told the news wire the cuts could exceed the 5,800 jobs lost in 2009, the biggest in Microsoft's history.

In a memo last week to the company's 127,000 employees, Microsoft chief executive Satya Nadella said "nothing was off the table" as Microsoft changed its culture. Bristling with references to Friedrich Nietzsche and Austrian fin de siècle writer Rainer Maria Rilke, his 3,200-word memo contained no specifics on jobs, but Nadella said Microsoft needed to be leaner, with more emphasis on mobile devices and cloud computing.

Nadella, a company veteran who became chief executive in February, has promised to reveal more detail on his strategy when he reports Microsoft's latest quarterly earnings on 22 July. He is only the third person to lead Microsoft in its history. He has a low-profile outside the company and remains less well-known than founder Bill Gates, who retains a role as technology adviser to the company. In April Microsoft reported better-than-expected net profits of $5.7bn (£3.4bn), when it reported an uptick in demand for its cloud-computing products and subscription-based Office programmes.

The Microsoft job cuts are not a surprise following the software giant's acquisition of Nokia's €5.4bn (£4.6bn) mobile phone business in September, when it promised $600m (£350m) cost savings in the 18 months after the deal, against a backdrop of broader changes in the industry. Hewlett Packard, another tech titan of the 1990s, announced in May it was laying off up to 16,000 workers amid declining sales.