Microsoft to cut 5,000 jobs

Microsoft to cut 5,000 jobs

Summary: The official word on layoffs is out: Microsoft is going to cut 5,000 jobs over the next 18 months, 1,400 of them today, January 22.


The official word on layoffs is out: Microsoft is going to cut 5,000 jobs over the next 18 months, 1,400 of them today, January 22.

From the company's Q2 earnings release:

"Microsoft will eliminate up to 5,000 jobs in R&D, marketing, sales, finance, legal, HR, and IT over the next 18 months, including 1,400 jobs today. These initiatives will reduce the company’s annual operating expense run rate by approximately $1.5 billion and reduce fiscal year 2009 capital expenditures by $700 million."

I was predicting the Softies were going to get by simply by shuffling folks around and quietly closing groups. It sure seemed like there were a lot of places where the fat could be trimmed. But I was wrong.

That said, the 5,000 cuts are not as severe as many had been predicting. Rumors had Microsoft cutting 8,000 to 15,000 or more jobs out of a total worldwide employee roster of 96,000.

Microsoft also is announcing as part of its cost-cutting measures, including "the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing."

Other tidbits from today's earnings news:

* Microsoft’s second quarter earnings, the company reported net income of $4.17 billion, or 47 cents a share, on revenue of $16.63 billion, up only 2 percent from a year ago. Wall Street was expecting earnings of 49 cents a share.

* "Due to the volatility of market conditions going forward, Microsoft is no longer able to offer quantitative revenue and EPS (earnings per share) guidance for the balance of this fiscal year. Microsoft offers operating expense guidance of approximately $27.4 billion for the full year ending June 30, 2009."

* Revenue for Windows client -- one of Microsoft two biggest cash cows --  declined eight percent for the quarter "as a result of PC market weakness and a continued shift to lower priced netbooks." The bright spots for Q2: SQL Server, Windows Server and Xbox 360.

* In the past 12 months, Microsoft's headcount grew 14 percent.

In Microsoft's 10-Q filing with the SEC, the company provided more specifics on how it plans to cut employee-related expenses:

"The net headcount in these functions is expected to decline by 2,000 to 3,000 over the next 18 months. Merit increases will be eliminated for employees in fiscal year 2010. Operating expenses will be reduced by cutting travel expenditures, reducing spending on vendors and contingent staff, reducing marketing spending, and scaling back capital expenditures. These initiatives will reduce our annual operating expense run rate by approximately $1.5 billion. These plans are being finalized, and the costs of implementation and employee severance will be included in our third quarter results of operations"

Topics: Microsoft, CXO, IT Employment


Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • the end is comming for M$

    Linux and OSS are winning the battle with the evil.
    It's time to dump M$ stock and software and invest in OSS software and companies.
    Change is comming to America and the world, fueled by the grass roots of the FOSS.
    Linux Geek
    • Can I have some of that stuff.

      Hey, Linux Geek. Can I have some of that stuff your smoking?
      • DON'T!

        I don't known what sh*t he smoked but truly it is damaging their brain

        • Thank goodness

          that we have big brand names to tell the stupid what to think ;-)
          • What will the Ballmer shills do....

            Come on here for free?

            LOL.... :D
            hasta la Vista, bah-bie
          • Make as much noise as they can

            for as long as someone is willing to pay them to be oppressed with expensive and shoddy software I strongly suspect/know ;-)
          • <i></i>

    • Nice job!

      As believable as bin Laden's pronouncements of the death of the West. Keep preachin' from the cave, my man!
      • How's your pension?

        Perhaps we "need" another significant and catastrophic event to help keep the people unified?
    • I guess you missed the part...

      About the bright spots being SQL, Windows Server, and Xbox. For now the netbooks may look as an advantage for linux, but from what I have seen with Windows 7 I think that may turn right back around, but thats just a guess so I'm not preaching that as fact my friend. I don't see linux picking up much on the desktop and laptop side, which is mostly coming from MacOS, but even that declined last quarter from the previous one. which is not FOSS backed. Thats right neozon@, I want some of that good stuff your smokin.
      • I want some of that stuff that you're ...

        ... injecting/installing. I'm sure that it must eventually come to feel "normal".
    • if so many companies will be gone before them!

      short sighted responses, really sorry to see this kind of reasoning
    • God it must be nice...

      ... to live in such a one-dimensional world.

      When job losses affecting every industry and almost every company are starting to affect one's own, it's sobering. I feel for MS employees at the moment. The stress in their work environment, like any other faced by this kind of uncertainty (well, certainty now to some extent) would be difficult to say the least.

      Given it's a bit of ludicrous spam I shouldn't even bother replying to this thread, but I gotta say... if taking an interest in Linux meant associating with imbeciles like you I wouldn't bother mate.
      David S M
    • Okay... Good Luck on that statement...

      What makes you think any open source companies, and groups are immortal? They can, and may be hit as hard or harder than Microsoft.

      They are not evil, and they're a business. They are not the only business in the world that have tatics that you may find evil. There also more business out there that use more evil tatics, but you see Microsoft as the most evil for some reason.
    • Maybe sell the AV companies they bought instead.

      Microsoft has generated quite a bit of controversy
      acquiring the following AV companies:

      Sybari Software Inc.
      GeCAD Software
      Giant Company

      It's been viewed as a conflict of interest (techdirt)
      for such a virus ridden product to have AV software
      bought from the same company that made the software.
    • You're MS check to act this bad ending too

      you and Mike Cox will have to go back to work for Sun, or such.
    • Great idea..

      Lets invest in companies that dont sell products, thats a great idea..

      Please, M$ is here to stay and will be here for a long time to come.. Might as well just get used to it..
    • Really?

      Which OSS company am I going to invest in then?

      Before you leap to suggest any number of companies producing a product or service that earns no or little revenue and which presents limited revenue growth in the future, understand that most people don't invest in a company on ideological grounds - they invest their money in order to get more money back in the future.

      So, suggestions please.
  • Stock market scam

    The stock market should be done away with, and MS needs to build a new OS that actually has security...

    Until then Open_Source rules.

    • Right, because

      the idea of joe sixpack being able to buy into a business is morally reprehensible.

      And, please, spare me the rant about the evil rich. All that proves to me is that you are rotten with envy.