Microsoft Butchers 5,000 Microserfs; Q2 Profit Falls 11%

In the first mass firing in its 34-year history, Microsoft is firing 5,000 employees blaming a difficult economic environment and slowdown in IT spending.

Wonder how many jobs Microsoft will shed in India.

Microsoft has a significant presence in India including a development center in the South Indian city of Hyderabad..

Here’s an excerpt from Microsoft’s announcement:

In light of the further deterioration of global economic conditions, Microsoft announced additional steps to manage costs, including the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing. As part of this plan, 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.

Profits Down in Q2
Operating income, net income and diluted earnings per share for the quarter were $5.94 billion, $4.17 billion and $0.47, declines of 8%, 11% and 6%, respectively, compared with the prior year.

Microsoft said revenue for fiscal Q2 (ended December 31, 2008) came in at $16.63 billion, a 2% increase over the same period of the prior year.

According to Microsoft CFO Chris Liddell: 

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. 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.

Citing volatility of market conditions going forward, Microsoft said it’d no longer offer quantitative revenue and EPS guidance for the balance of this fiscal year. On October 23, 2008 (when releasing the fiscal Q1 results), Microsoft had forecast fiscal 2009 revenue in the range of $64.9 billion to $66.4 billion, operating income in the range of $24.4 billion to $25.5 billion and diluted earnings per share in the range of $2.00 to $2.10.

However, Microsoft offered operating expense guidance of about $27.4 billion for the full year ending June 30, 2009.

One Response to "Microsoft Butchers 5,000 Microserfs; Q2 Profit Falls 11%"

  1. quarks   January 22, 2009 at 3:04 pm

    your figures official??? sources??? Responds:

    Yes, official numbers.

    Pl see here.

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