After much, much, much speculation, Microsoft let the cat out of the bag today: due to weak results, Microsoft is going to cut 5000 jobs. Those 5000 jobs will disappear over the course of 18 months, with 1400 jobs being cut immediately. Quarterly results, as well as the cost-cutting measures, were made known in a press release today.
The company has suffered under the economic stagnation, which hit the overall computer industry pretty hard. Still, the company posted a profit of 16.63 billion USD for the second quarter (ended 31st December), which is up just 2% from the same period last year, and 500 million USD below October 2008 forecasts. Windows unit sales dropped 8%, mostly due to the economic downturn and the shift towards netbooks (from which Microsoft profits less). However, the server and XBox divisions showed profits, going up 15% and 3%, respectively.
As a consequence, the Redmond software giant is forced to cut jobs. Over the course of the coming 18 months, 5000 jobs will be cut, with 1400 being cut instantly. They will also delay salary increases and save money by other means. “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,” Ballmer says in the press release, “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 company will detail the results during a conference call later today.
Sad for the people loosing their jobs. But hopefully some good will come out of it, and by that I mean better products from Microsoft. It sounds like Windows 7 is a step in the right direction.