Microsoft axes 5,000 jobs as recession hits software giant
Source: http://www.telegraph.co.uk/scienceandtechnology/technology/microsoft/4315662/Microsoft-axes-5000-jobs-as-recession-hits-software-giant.html]
The software giant said it planned to make the job cuts over the next 18 months – although around 1,400 are expected to be informed of their departure on Thursday. It is understood around 60 of the cuts will be in the UK.
Microsoft blamed the “deterioration of global economic conditions” for cuts, which left shares in Microsoft down by 6.4pc in early trading in New York.
“Economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact,” said chief financial officer Chris Liddell, adding that the company expects the difficult trading environment to persist until at least the end of June.
The company had been due to announce its results for the three months to the end of December tonight, after the market had closed in New York, but felt the need to publish early as it wanted to inform staff of the redundancies.
The job cuts will come across the board – in research and development, marketing, information technology, sales, legal and human resources.
Microsoft reported a profit of $4.17bn in its second quarter, down 11pc on the $4.71bn earned in the same period last year. The profit equated to earnings per share of 47 cents-a-share, slightly below the 49 cents-a-share Wall Street analysts were expecting. Total revenue stood at $16.63bn, up 2pc on a year ago.
The biggest weakness came from client revenue, which fell 8pc as a result of what the company said in a statement was “ PC market weakness and a continued shift to lower priced notebooks.”
But growth did come in its server and tools division, with sales up 15pc, and its entertainment division saw a 6pc increase in sales, thanks to the continued strength of its Xbox computer games console.
In addition to the staff costs, Microsoft is looking to reduce expenses elsewhere in the business. In a letter to all 91,000 employees, chief executive Steve Ballmer said that the company is also looking to cut travel costs by 20pc, and will make cuts in spending on vendors and what he called “contingent staff.”
The firm is also scaling back the expansion of its Puget Sound site in Washington state, and will reduce its marketing spending.
The job cuts come on the back of a bad 24 hours for the technology industry in general, with Intel saying it is to shed up to 6,000 jobs through the closure of five plants in the US and Asia, while Motorola said it plans to lose 4,000 staff as a result of the continued downturn in the consumer economy
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