Microsoft says it will slash up to 5,000

iVillage Member
Registered: 03-23-2003
Microsoft says it will slash up to 5,000
16
Thu, 01-22-2009 - 12:44pm


 
The Microsoft Blog


Microsoft says it will slash up to 5,000 jobs


Microsoft Corp. said Thursday morning it would lay off up to 5,000 employees, or 5 percent of its work force, over the next 18 months, including 1,400 jobs today, marking the first time in its history that it has laid off workers across the company.









CUTBACKS AT MICROSOFT
Full coverage


· Microsoft says it will slash 5,000 jobs
· Microsoft's quarterly results fall short of expectations
· E-mail: Ballmer to employees on the company's layoffs
· Microsoft cuts back on campus expansion plans





The announcement came as Microsoft posted quarterly results far short of analysts' and its own expectations. Read that story here.


The company said that jobs would be eliminated in research and development, marketing, sales, finance, legal, human resources, and IT. At the same time, the company said it would continue to hire in other areas, including its search business, so its work force would actually fall by between 2,000 and 3,000.


A spokeswoman said the company would provide "generous severance and outplacement services" to employees who lose their jobs.


Microsoft also said that travel budgets and marketing expenses would be slashed and confirmed that it would postpone almost all new construction on its campus in Redmond. The company also said that it would reduce the number of vendors and contingent staff. Merit raises will be eliminated for employees next year.


The changes should cut the company's annual operating expenses by $1.5 billion this year.


The cutbacks show how the economy has taken a toll even on companies renowned for their ability to withstand downturns.


The announcement is also a severe blow to the Puget Sound region, which counts Microsoft among its largest and strongest employers. A Microsoft spokeswoman said the company would not say how many jobs would be lost in Washington state.


Already, unemployment had been mounting sharply in the region, reaching 7.1 percent in December, up from 6.4 percent the month before.


Microsoft is legendary for liberally adding to the ranks of its employees. Its work force has almost doubled in the past six years.


Even as the economy started to show signs of weakness, Microsoft continued to hire, adding a record 12,694 workers in its 2008 fiscal year.


The company had almost 96,000 employees, as of late November.


But in recent months, as the economy continued to deteriorate, Microsoft had warned that it was looking to cut costs.


The company had also cut hiring drastically. Microsoft added 380 workers in November, down from 1,000 the month before.


Microsoft has cut employees before, including 40 at its Razorfish advertising agency in early November and more than 200 sales employees in June 2006.


Layoffs at Microsoft, though, have never come close to the magnitude of those announced Thursday.


The layoffs had been rumored since a month ago.


Two blogs had reported that the company was preparing to lay off between 10 percent and 17 percent of its workers.


In response to those reports, several analysts had encouraged the company to cut its work force, saying layoffs would help the company's stock, which is at a 10-year-low, and help offset a drop in sales.


At the Consumer Electronics Show in Las Vegas two weeks ago, Microsoft executives had refused to comment on the possibility of layoffs.


Asked about the company's hiring plans, Robbie Bach, the president of Microsoft's Entertainment and Devices Division, said, "That will play itself out."


"The thing for people to understand is like every company in the current economy we're looking at how we apply our resources, where we apply them," he said.


Posted by Joseph Tartakoff at January 22, 2009 6:05 a.m.

· Return to Microsoft says it will slash up to 5,000 jobs







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iVillage Member
Registered: 02-19-2008
Thu, 01-22-2009 - 3:09pm
Windows Vista really hurt Microsoft. I guess this is the proof.


Edited 1/22/2009 4:42 pm ET by postreply
iVillage Member
Registered: 03-23-2003
Thu, 01-22-2009 - 5:42pm

Ummm...not quite.


iVillage Member
Registered: 03-23-2003
Thu, 01-22-2009 - 5:46pm

Excerpted from:


iVillage Member
Registered: 01-04-2009
Thu, 01-22-2009 - 6:08pm
I have to say that I was hesitant to purchase my own new laptop, because everything out there was running Vista (except Mac).

 

iVillage Member
Registered: 02-19-2008
Thu, 01-22-2009 - 9:20pm

We research news differently. My comment was based on the following - http://www.computerworld.com/action/article.do?command=viewArticleBasic&taxonomyId=14&articleId=9126591&intsrc=hm_topic

Slow Vista sales hit Microsoft revenues as netbooks gain ground

But the company's server software group is up 15% on Hyper-V strength, says analyst

January 22, 2009 (Computerworld) Sales of Windows desktop software dropped 8% last quarter compared to a year ago, while Microsoft Corp.'s server division revenues were up 15%, illustrating the rejection of Windows Vista and the acceptance of Windows Server 2008, an analyst said Thursday morning.

"Very disappointing results from the Windows Client unit," said Neil MacDonald, an analyst with Gartner Inc. "But it was very predictable, especially after Intel's earnings report." Last week, Intel announced that its fourth-quarter profit plummeted 90%.

Revenues for the Windows client group totalled $3.98 billion in Microsoft's second fiscal quarter, which ended Dec. 31, 2008, down 8% compared to the same period in 2007 because what the company called the "PC market weakness and a continued shift to lower priced netbooks."

MacDonald echoed those reasons, but added more detail. "When people look at opportunities for cost savings, they first think about not replacing computers," he said. "They try to get another year of life out of their notebooks and desktops. And that goes right to Microsoft's bottom line . If PCs aren't selling, Microsoft's not making money."

But Windows Vista -- 2007's problem- and perception-plagued operating system -- also played a major part in the revenue drop, said MacDonald. "Compounding the problem is the fact that Vista has been a very disappointing release. That makes a bad situation worse."

MacDonald, along with fellow Gartner analyst Michael Silver, made waves last year by arguing that Windows was "collapsing" because of the operating system's increasingly bloated code base and inability to roll out upgrades in a timely fashion.

In a sideways fashion, Microsoft confirmed that Vista's sale were down significantly in the quarter quarter. "There was double-digit declines in premium SKUs" of both the business and consumer lines of Windows, said Frank Brod, Microsoft's chief accounting officer, referring to the higher-priced editions, including Vista Home Premium, Vista Ultimate and Vista Business.

The bright spot, according to both Microsoft and MacDonald, was the growth in sales of "netbooks," the new category of small, lower-priced laptops. But even that came with a price. "The uptake in netbooks also played a part, because although there was growth in that segment, those machines are running Windows XP," said MacDonald. "Vista doesn't fit."

Microsoft makes less on Windows XP per copy that it sells to computer makers than it does for Windows Vista.

While the client-side revenues took a dive, sales for the Server and Tools division were $3.74 billion last quarter, a 15% increase over the same period in 2007. "Double-digit growth, that's fantastic results given this economic climate," said MacDonald.

The server group, which released Windows Server 2008 almost a year ago, "has been on a roll, even in this tough economy," said MacDonald, who spelled out several reasons.

"The move to virtualization is a clear cost savings for companies," he said, noting that Microsoft gives away its Hyper-V virtualization software and sells its management tool "at a very aggressive price."

MacDonald pegged Hyper-V and the also-important widespread accolades for Windows Server 2008 as key drivers in Microsoft's impressive gains.

The near future doesn't look much brighter for Windows client, MacDonald said. "There's a glimmer of hope in the second half of the year," he argued. "If Windows 7 comes out in advance of the holiday season, consumers may once again get excited about buying a new computer.

"Consumers and businesses can't continue to run their old machines forever," he said.

Microsoft released a public beta of Windows 7 on Jan. 10, a fact that company executives mentioned several times Thursday morning during the conference call with Wall Street analysts.

The company also announced that it would cut 5,000 jobs, with first 1,400 layoffs slated for today.

iVillage Member
Registered: 03-23-2003
Fri, 01-23-2009 - 11:19am

I don't think that we research that differently.


iVillage Member
Registered: 02-19-2008
Fri, 01-23-2009 - 12:53pm

We have a number of Windows XP PC's, and one Windows Vista PC. The Windows Vista PC is identical with respect to hardware to the majority of our other PC's.

Guess which PC causes the majority of the problems. The problems are not related to hardware.




Edited 1/23/2009 1:48 pm ET by postreply
iVillage Member
Registered: 03-23-2003
Fri, 01-23-2009 - 1:19pm

Hmmm...well, off the top of my head, I can think of 10 friends/relatives who have Vista.


iVillage Member
Registered: 02-19-2008
Fri, 01-23-2009 - 1:52pm

Clearly Vista is a dud, and has hurt Microsoft. Not just as a product, but financially It has seriously damaged the image of Microsoft.

Windows 7 may help. It seems to be getting great reviews. Vista did not.

I sometimes feel sorry for people who came late to computers and only know Vista or are forced to know vista. More experienced users often have an opportunity to install XP.

iVillage Member
Registered: 03-23-2003
Fri, 01-23-2009 - 2:17pm

Clearly Vista is a dud, and has hurt Microsoft. Not just as a product, but financially It has seriously damaged the image of Microsoft.


In your opinion.


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