Microsoft Cuts 5000 Jobs

January 26th, 2009 at 12:00 am

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The scary thing about the headlines during a recession is the number of jobs being cut from companies affected.  Over the past couple of months we’ve seen quite a lot of lay offs happening everywhere.  In the US, the first ones to be affected were the small startups.  Now, the biggest companies are reducing their costs and as a result laying off thousands of people.

Last Thursday, Microsoft announced that they will be taking steps to cut costs despite a 2% revenue increase for the second quarter ended on December 31, 2008.  However, in the dire economic situation around the world, the profits were down.  Microsoft attributes an 8% decline in the PC market to the rising popularity of cheaper and less powerful netbooks.

Of course Microsoft is still a strong and rich company but measures must be taken to keep them afloat.  “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,” said Steve Ballmer, chief executive officer at Microsoft. “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.”

As a result of the further deterioration of global economic condition, Microsoft will eliminate up to 5,000 jobs in R&D, marketing, sales, finance, legal, HR, and IT over the next 18 months, including 1,400 jobs today. These initiatives will reduce the company’s annual operating expense run rate by approximately $1.5 billion and reduce fiscal year 2009 capital expenditures by $700 million.