5 000 jobs axed in Microsoft's first-ever cull

Microsoft has proven that it’s not immune to the recession, announcing 5,000 job cuts. This is the first time in its history that staff cuts have had to be made.

One-thousand-four-hundred jobs will go immediately, followed by a further 4,000 over the next 18 months. The job losses will be made across the areas of research and development, marketing, sales, finance, legal, human resources and IT.

The company is also freezing bonuses for the year, cutting back on development projects and also slashing marketing and travel budgets.

This announcement came on the back of the release of Microsoft’s second quarter earnings of $16.63bn, showing income and earning declines of between 6 and 11 per cent.

“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 Chris Liddell, Microsoft CFO. “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. In this environment, we will focus on outperforming our competitors and addressing our cost structure.”

Steve Ballmer, the company’s CEO, was quick to offer a positive spin.

“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,” he said. ”We will emerge an even stronger industry leader than we are today.”

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