January 22, 2009
Microsoft Makes Cuts
In an attempt to cut upwards of $1.5 billion dollars in staff and support costs, Microsoft is cutting approximately 5,000 jobs. In a press statement, the company said it is lowering, "headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing." This is the first series of job cuts in the company's history. With over 94,000 employees worldwide, the company's overall headcount is being reduced by about 6%. The bulk of the cuts will be made over a 18-month period though 1,400 workers will be let go today. In its statement, the company said it saw stronger revenues in the quarter ending December 31, reported at $16.63 billion, but overall operating profits had fallen eight percent to $5.94 billion. "While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach," stated CEO Steve Ballmer. "We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today." Microsoft's chief financial officer, Chris Liddell said the economy and information technology spending had "slowed beyond our expectations," and that swift action from management was necessary. Microsoft did not release a revenue or earnings forecast for the remainder of 2009 citing market uncertainty. "We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year," said Liddell. Cuts are expected immediately in research, finance, and technology roles. As consumers move away from large scale computing devices towards smaller netbooks and handheld devices, Microsoft's remaining strengths are found in servers, tools and entertainment or gaming devices such as Xbox360.