Microsoft to slash jobs, posts quarterly profit drop

Microsoft said today it would cut up to 5.5% of its jobs, the first mass layoff in the 33-year-old tech giant's history.

The world's largest software maker plans to let go 5,000 of its nearly 90,000 employees, including 1,400 today, "in light of the further deterioration of global economic conditions."

Microsoft's quarterly revenue and profit also fell short of its previous forecasts and Wall Street's expectations. For its fiscal second quarter, the Redmond, Wash., company posted revenue growth of only 2%, to $16.63 billion, and an 11% drop in net income, to $4.17 billion. It blamed weak demand for personal computers that run its Windows operating system and Office software.

Its shares are trading down more than 8% this morning. Microsoft had been scheduled to announce its quarterly results after the stock markets closed but got a jump on it amid heavy speculation about job cuts. Chief Executive Steve Ballmer said:

While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach. We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today.

The tech sector, like many industries, is getting nailed by the recession. Corporations are cutting back on their information-technology budgets, and consumers ...

... are putting off purchases of computers, cellphones and other tech gear.

Overnight, Sony announced that it would swing to a $1.7-billion annual loss, its first in 14 years and only the second in its history, after originally forecasting a $1.5-billion profit. The Japanese electronics giant is expected to cut more jobs on top of the 8,000 reductions it announced last month. In another first, EBay reported its first drop in quarterly revenue Wednesday.

This sortable list on the Wall Street Journal's Real Time Economics blog shows the depth of job cuts by tech companies in the first three weeks of 2009: Intel is cutting 6,000 jobs, or 7%; Bose 1,000, or 10%; Advanced Micro Devices 1,100, or 9%; Autodesk 750, or 10%; Motorola 4,000, or 6%; Seagate Technology 800, or 10%; Lenovo Group 2,500, or 11%; EMC 2,400, or 7%; and Logitech International 500, or 5%.

Corrected, 3:25 p.m.: An earlier version of this post erred in stating that Sony's estimated $1.7-billion loss was for the quarter. In fact, that figure refers to the full-year loss.

-- Chris Gaither

Photo: Microsoft CEO Steve Ballmer at the Consumer Electronics Show. Credit: Robyn Beck / AFP/Getty Images

Comments

[Tom Turkey]

On behalf of all the high-tech industry people of California and Nevada, some of whom, like the Great Jay Miner (father of the "Amiga") did not live to see this day, I have to say:

whoo hoo!
http://www.youtube.com/watch?v=Dg4aPJ93b8o

(This is like 20 years overdue.) Buy a Mac and get things done, or a Linux-based PC off Walmart.com DELL.com or Acer.com to do things cheap and efficiently. Just leave VIsta and the Zune where they are and let nature take care of this unnatural problem.

[John]

I'm an Apple man myself but I hate to see the effects of the economy effecting such a large and strong company, it really shows how bad things are. On a side note, I've been playing around with Win 7 b1 and have been quite pleased with it.

http://www.woopid.com/

[Enlightenment]

>>Buy a Mac and get things done

Now that is the biggest joke that I've ever heard! Sounds like you are a SMUG apple fanboy thus your statement is meaningless.

People who use Windows PCs do real work, unlike those people who sit around coffee shops acting all SMUG and thinking they are cool because they have a fruity computer.

[LinuxGeek]

Although I am, and have always been, vehemently anti-Microsoft (because of their crappy, bloated, insecure, overpriced products and their underhanded business practices), I hate to see anyone lose their job. So, on the one hand, I'm glad to see that [apparently] Linux is finally making a dent in the Micro$oft stronghold but, on the other hand, it saddens me to think of 5,000 people losing their jobs. I wish them well and hope they're able to find comparable employment soon.

[Steph W]

Regardless of how one feels about the company and its products, one would have to feel for the people who are losing their jobs--especially since a new one will be very hard to come by these days. Things will definitely get worse before they get better :(