“Microsoft Corp. will cut 5,000 jobs, or about 5 percent of its workforce, as the global recession eats into demand for software,” Dina Bass reports for Bloomberg. “The reductions, Microsoft’s first companywide firings, will take place in nearly all areas, including research, sales and marketing, the company said today in a statement. The measure, announced with the company’s second-quarter earnings, will save $1.5 billion, Microsoft said.”
“Chief Executive Officer Steve Ballmer is under pressure to reduce costs as sales growth dries up in what may be the worst recession since World War II. The company’s Windows division, which accounts for about a quarter of sales, is suffering after personal-computer shipments rose at the slowest rate in six years in the fourth quarter,” Bass reports.
“Second-quarter net income was $4.17 billion, or 47 cents a share, compared with $4.71 billion, or 50 cents, a year earlier, Redmond, Washington-based Microsoft said. Sales were $16.6 billion in the period, which covered the last three months of 2008,” Bass reports. “Analysts predicted profit of 50 cents a share and sales of $17.1 billion, according to a Bloomberg survey. In October, the company forecast profit of 51 cents to 53 cents a share on sales of $17.3 billion to $17.8 billion.”
“Microsoft shares fell $1.42, or 7.3 percent, to $17.96 in early trading after closing at $19.38 on the Nasdaq Stock Market yesterday,” Bass reports.
“Microsoft had 94,286 employees at the end of September, an increase of 55 percent since June 2005. The company has made jobs cuts in the past, although they were smaller and were limited to a single unit or product,” Bass reports. “Growth in the PC Windows unit was stymied by slowing demand for all but the cheapest machines… To reduce costs, Microsoft is also delaying parts of a planned campus expansion and letting some building leases expire, spokesman Lou Gellos said this week.”
Full article here.
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