Microsoft to Cut Up to 5,000 Jobs

Profit falls 11% from year-earlier period

U.S. software giant Microsoft Corp. said Jan. 22 it was cutting up to 5,000 jobs over the next 18 months including 1,400 immediately due to a slowing economy and weak spending on technology.

Releasing its results for the second quarter of its fiscal year, Microsoft said net profit fell by 11% from a year ago to $4.17 billion on revenue of $16.63 billion, a 2% increase over a year ago.
The Redmond, Wash.-based company said earnings per share were 47 cents, less than the 49 cents per share forecast by analysts.

In response to current global economic conditions, Microsoft said it was eliminating up to 5,000 jobs in research and development and marketing, sales, finance, legal, human resources, and information technology over the next 18 months, including 1,400 jobs today.

The world's largest software firm said the jobs cuts were among various steps to manage costs "including the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing."

These initiatives will save the company approximately $1.5 billion in annual operating expenses and reduce 2009 capital expenditures by $700 million, the company said.

Microsoft CFO Chris Liddell said "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.

"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," he said.

Microsoft's share price fell 7.12% to $18 in electronic trading ahead of the opening bell on Wall Street.

Copyright Agence France-Presse, 2009

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