Microsoft set to cut 5,000 jobs

Microsoft announced its second quarter results today and as many had predicted there are some job cuts involved.

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. It's expected the job cuts will reduce the company's annual operating expense run rate by approximately $1.5 billion.

Microsoft claims client revenue declined 8% as a result of PC market weakness and consumers purchasing lower priced netbooks. Entertainment and Devices revenue grew 3% driven by a high demand for Xbox 360 consoles over the Christmas perioud, with a record 6 million units sold in the quarter.

In a statement direct from Microsoft, Microsoft CEO Steve Ballmer said "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."

In a memo to employees, Ballmer said "the decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company's cost structure so that we have the resources to drive future profitable growth." He also mentions Microsoft's cost cutting, "to increase efficiency, we're taking a series of aggressive steps. We'll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We've scaled back Puget Sound campus expansion and reduced marketing budgets. We'll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year."

Microsoft shares are currently trading 6.86% down at the time of writing.

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32 Comments

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they talk about 5000 people like chickens have no homes or families or expenses what this people will do.

money money money the company can't take the people couple of years while the people take the company
up on there back for many years. very decent decision.

bill & balmer is doing a many risks this days.

windows 7 will be build on this 5000 jobs cut's history.

Because apple also produced it's hardware, they need only sell 1 Mac to equal around 3/4 (unsure exactly) of windows products being sold. in fact it's probably even more.

Microsoft also has to keep giving out it's money to the EU, and other money hungry entities. This i believe is partly due to the recession in the united states, but also because of the fines, and other law suits.

I say buy stocks while the prices are still low... My prediction is that Win7 will be a huge boost to MSFT stock when it's released or soon after.

Cant argue with that if you looked back at the share prices around the time of each windows launch (with perhaps the exception of vista) usually there is a surge when a new OS is released.

And I support firing the MSN staff....

Let's just hope these layoffs don't affect the development of Windows 7. It's off to a great start, so I'm hoping things won't take a turn for the worse.

You can say a lot of things about Microsoft but not that they would fire people so easily to get quick cash. It is also because I think they find this somehow humiliating for themselves.

The headline says 5000, but headcount will decrease around 2000/3000. Since they will creat between 2000 and 3000 new positions. So there is still hope that those people who are losing their jobs will find other jobs internally.

Microsoft has tons of dead weight within its ranks. Yes, it sucks for those getting laid off, but this may give MS the kick in the teeth they need to get their act together.

My question is more so why can Apple do it but other companies can't and that all of these tech industries are going under. Yet one company can create record profit and be opening new stores every month.

Apple is not in all the same markets as MS is...MS still made a profit, not a huge one though.,...

Apple = primiraly home users

MS 40% home users and 60% corporate

Give it some time..

Steve Jobs missing in action will also affect Apple..

And being a iPhone owner, I'm sure no new firmwares updates will come until July or August because of this..
And we will have to pay for 3.0 so they earn more money

bdsams said,
Apple is not in all the same markets as MS is...MS still made a profit, not a huge one though.,...

Apple = primiraly home users

MS 40% home users and 60% corporate

Well in the industry I do stuff in Apple is still primarily graphics, audio, and video.

Ricky Smith said,

Well in the industry I do stuff in Apple is still primarily graphics, audio, and video.

Apple is a hardware company and MS is a software company. You really can't compare the business models.

I would have thought a hardware manufacturer would be hit harder though; the reverse of what we're seeing now. Because software is usually cheaper and works on even old hardware. That is, that there is more of a demand of purchasing software than there is of having the latest hardware.

Jugalator said,
I would have thought a hardware manufacturer would be hit harder though; the reverse of what we're seeing now. Because software is usually cheaper and works on even old hardware. That is, that there is more of a demand of purchasing software than there is of having the latest hardware.

Yea, but apples stuff is expensive and a lot of college students buy them using grants/student loans

bdsams said,
Apple is not in all the same markets as MS is...MS still made a profit, not a huge one though.,...

Apple = primiraly home users

MS 40% home users and 60% corporate

False. Apple and Microsoft share a lot of the same markets.

Shadrack said,


False. Apple and Microsoft share a lot of the same markets.


They just share SOME markets...not all...And Apple has good profit margin..and Microsoft major business model is Software...and Apple's is hardware..

So declining sales and consumers purchasing cheaper notebooks? Yet Apple just announced it's highest earnings yet or something along those lines with 10 billion dollars? But I thought we were just a bunch of over priced products that no one bought.

Ricky Smith said,
So declining sales and consumers purchasing cheaper notebooks? Yet Apple just announced it's highest earnings yet or something along those lines with 10 billion dollars? But I thought we were just a bunch of over priced products that no one bought.

Apple has more profit margin against other competitors :-D
(if you can compare it...Xbox 360 sales was pretty good & made profit too )

Ricky Smith said,
So declining sales and consumers purchasing cheaper notebooks? Yet Apple just announced it's highest earnings yet or something along those lines with 10 billion dollars? But I thought we were just a bunch of over priced products that no one bought.

*******, take that elsewhere... these are people's lives we're talking about.

LTD said,
Bah, now look what ya did!

It amazes me how everything that is Apple vs. Microsoft is instantly taken in a negative manner. Quite simply I was asking what I stated bellow.

Ricky Smith said,
It amazes me how everything that is Apple vs. Microsoft is instantly taken in a negative manner. Quite simply I was asking what I stated bellow.

Because you are a typical Apple smug.

We all knew it was coming, since December. Sad day indeed, and the stocks have already started taking a hit (Down 7.54%). I'll be glad when this recession hits rock bottom so we can start getting things back to normal.

couldn't they have included the marketing geniuses that bowed to manufacture's demands and came up with Vista Capable?

Yes, times are tough, belts are tightening, it's a chance to cut useless fat away everywhere...

(not saying everyone whose losing their job is useless fat....just wishing that were true. sorry for everyone who DID or will lose their job.)

couldn't they have included the marketing geniuses that bowed to manufacture's demands and came up with Vista Capable?

Maybe they have, what do we know...

The current ETA is unknown but AFAIK Obama , this can last up to 2 years. Of course, it is pretty hard to determine a exact date, in fact nobody knowns if the situation will go better or will worsen.


Magallanes said,
The current ETA is unknown but AFAIK Obama , this can last up to 2 years. Of course, it is pretty hard to determine a exact date, in fact nobody knowns if the situation will go better or will worsen.

Ok