Microsoft will likely miss its own earnings target and announce thousands of job cuts this week, according to a Reuters report. The company is scheduled to announce its quarterly results tomorrow. Microsoft is a big player in a number of struggling sectors - personal computers, business software and even video games, areas that have all been hit by the global economic downturn. The Reuters piece quotes McAdams Wright Ragen analyst Sid Parakh:
Checks indicate that Microsoft is likely to engage in headcount reductions to the tune of 6,000 to 8,000 employees or 6 percent to 8 percent of its 95,000 workforce. Our checks also revealed some speculation over the potential for a second round of cuts in some groups sometime later in the year.
Microsoft, of course, hasn't said anything official about job cuts, though insiders have mentioned to me that reductions - with no specific number or timeline tied to them - are on the horizon. And other analysts have said that reductions may not come in one big layoff sweep but rather through attrition or other specific cutbacks.
Regardless, the 2008 holiday shopping season was considered to be one of the worst in decades and Microsoft was not immune to the fallout from it. Analysts are expecting a profit of 49 cents per share for the quarter on $17.1 billion in sales, even though Microsoft had forecast income of 51-53 cents per share on $17.3 billion to $17.8 billion.
Also see: CNET: Where will Microsoft cut?