For the first time in its 34-year history, Microsoft Corp. [
MSFT] has announced widespread
layoffs, slashing up to 5,000 jobs over the next 18 months, including 1,400 Thursday. The moves are expected to save the Seattle company $1.5
billion in annual operational costs.
News of layoffs was
expected to come after the end of the trading day, but instead the software giant
released its fiscal second-quarter earnings before Thursday's opening bell. Revenue for the quarter, which ended Dec. 31, was up 2% from the
same quarter the previous year, but operating income, net income and
diluted earnings per share were down 8%,11% and 6%, respectively.
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The company did drop one bombshell: "Due to the volatility of market conditions going forward, Microsoft is
no longer able to offer quantitative revenue and EPS guidance for the
balance of this fiscal year," says a statement.
"Economic activity and IT spending slowed beyond our expectations in the
quarter," says CFO Chris Liddell. "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."
Beyond the job cuts, Microsoft is also reducing travel
expenses, trimming corporate campus expansion plans and eliminating merit
increases, according to a staff
memo from CEO Steve Ballmer.
"While
this is the most challenging economic climate we have ever faced, I
want to reiterate my confidence in the strength of our competitive
position and soundness of our approach," says Ballmer in the memo.
Microsoft joins a growing list of major technology companies shrinking their workf orces amid
weakened demand for computers in the global economic downturn. Others that have announced layoffs include EMC Corp. [
EMC], Intel Corp. [
INTC], Hewlett-Packard Co. [
HPQ], Sun Microsystems Inc. [
JAVA] and Yahoo! Inc. [
YHOO]. -
Mary Kathleen Flynn
