Microsoft lays off 5K employees; saves $1.5bn

In Friday's IT Blogwatch, Richi Jennings watches bloggers watch Microsoft lay off 5,000 employees. Not to mention more Error'd...

Eric Lai reports:

While Microsoft Corp. plans to eventually eliminate up to 5,000 jobs, including 1,400 cuts to be made today, it is doing its best to minimize the impact on employees and its ongoing strategic efforts, CEO Steve Ballmer said ... In total, Microsoft will reduce its head count by 2,000 to 3,000 in the next 18 months ... [and] plans to cut its temporary and contract workers by up to 15%.


These and other cost-saving measures will help Microsoft save $600 million this quarter ... and $1.5 billion for the full fiscal year ending June 30 ... Some Wall Street analysts found the cuts too shallow and pointed out that Microsoft's expenses will still be up on a year-over-year basis.

Preston Gralla adds:

Overlooked in the Microsoft announcement about its layoffs of 5,000 people over the next 18 months is this startling revelation: The company's revenue decline is due, in large part, to the growth in the sales of netbooks.


 That's an astonishing admission. It means that people are forgoing higher-priced laptops, and instead buying netbooks --- and many of those netbooks are powered by Linux. So Microsoft loses out not only on sales of Windows, but also sales of Microsoft Office as well ... All the more reason why Microsoft needs to ship Windows 7 quickly.

Kara Swisher was on the earnings concall:

CFO Chris Liddell’s ... New Zealand accent was vaguely comforting, but it still cannot put lipstick on this pig ... At least Xbox 360 consoles were doing well, with six million units sold in the quarter. Too bad, it’s not a moneymaker!


Ballmer noted that Microsoft was not an M&A company, in general. In other words, Microsoft was still not buying Yahoo.

Om Malik:

As the company tries to get its act together, one question comes to mind: Should it give up on its search and online advertising efforts? The division brought in $866 million in revenues but lost $471 million.


The Online Services Group has lost a cumulative total of $3.1 billion over the past three years; losses in calendar year 2008 amounting to a whopping $1.6 billion ... why does Microsoft need to chase the proverbial rabbit (aka online advertising) down the hole, instead of refocusing its energies on what it knows best and expanding those markets?

Microsoft's own anonymous blogger asks, "Now what?":

The day that has been rumored for a month now has come. And the staff reductions I've been wanting since starting this blog back in 2004 are here, though within an economic context I certainly Do Not Want. I wanted intelligent, well-thought-out leadership to have seen long ago that we've doubled our ranks far too fast ... Yet here we are now, in the choppy waters of the global economic crisis, being reactive rather than opportunistic.


1,400 gone today ... and now we have the remaining 3,600 hanging over our head during the next 18 months - what does that mean? I assume at this point that it means aggressive performance management is the rule over, and over again for each [Mid-Year Career Discussion] and annual review from here on.

That's CrazyTalk:

Go to the Microsoft Careers home page and search for job openings - there are six new openings for TODAY alone - 853 openings altogether. Wonder how many of those will eventually be closed?

And finally...

Buffer overflow:

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Richi Jennings is an independent analyst/adviser/consultant, specializing in blogging, email, and spam. A 23 year, cross-functional IT veteran, he is also an analyst at Ferris Research. You can follow him on Twitter, pretend to be Richi's friend on Facebook, or just use boring old email:

Previously in IT Blogwatch:

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