Microsoft joins AMD, Intel in mass layoffs

David Worthington
January 22, 2009 —  (Page 1 of 2)
Microsoft has followed AMD and Intel as the latest industry heavyweight to order mass layoffs as a cost-cutting measure in response to worsening economic conditions.

In its annual report to shareholders, released today, Microsoft disclosed that it would dismiss 5,000 people over the next 18 months. A Microsoft spokesperson stated that the layoffs would begin immediately with 1,400 employees. The rest will gradually take place across the company in finance, human resources, IT, legal and corporate affairs, marketing, R&D, and sales.

Microsoft currently employs approximately 94,600 worldwide, not counting the layoffs that will occur after today's cuts.

"Every division is assessing its portfolio and prioritizing investments based on the best opportunities in the current economic environment," said the spokesperson. "While there are no major products being cut outright, we will consolidate some products and groups where it makes sense."

The cost cuts Microsoft has proposed, including the layoffs as well as cuts in facilities and marketing, could lower its operating expenses by US$1.5 billion, according to a UBS Investment Research report.

Microsoft also announced results for its fiscal second quarter 2009 that fell well below earning guidance. While still profitable, its stock's earnings per share was 47 cents, compared to a guidance of 51 to 53 cents. Revenues fell short by approximately $1 billion.

Much of the decline was experienced in Windows client revenue, a cash cow for the company. That revenue fell 8% "as a result of PC market weakness and a continued shift to lower-priced netbooks,” the company stated in its annual report.

Weak PC sales have also affected chipmakers AMD and Intel. Semiconductor sales fell to $20.8 billion in 2008 from $23.1 billion in 2007, according to a recent report by the Semiconductor Industry Association.

On Jan. 16, AMD announced that it intended to reduce its workforce by nearly 9% and will reduce employee compensation during its first quarter.

Its top executives are taking a hit to their base salaries, and rank-and-file employees will see their incomes drop on a staggered basis depending on their employment status. Other benefits, including the company’s 401(k) matching program, are being suspended indefinitely.

Related Search Term(s): finances, AMD, Intel, Microsoft

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