Microsoft Cuts 5,000 Jobs Following Low Earnings Report

By: Mary Smith
Staff Writer
Published: Jan 22, 2009

Microsoft announced it will slash up to 5,000 jobs and will make other cost management initiatives. The software giants unveiled a huge loss following its fiscal second quarter earnings report.

Microsoft Corp announced it will cut up to 5,000 jobs and will make other cost management initiatives. The software giants unveiled a huge loss following its fiscal second quarter earnings report. While client revenue declined, the software maker reported revenue of $16.63 billion.

"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," Microsoft CEO Steve Ballmer said in a statement.

Earlier this month, we reported from inside sources that Microsoft would announce a workforce reduction this month. Inside sources say that organizational changes began in early December 2008. A few departments were eliminated while a memo went out to employees addressing the restructure changes.

"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," Ballmer said.

The Microsoft Xbox 360 console sold a record 6 million units during the quarter. While client revenue decline by 8 percent as a result of a weaker PC market, consumers continued to shift to lower priced netbooks. The company also unveiled its new Windows 7 operating system which is currently in beta.

"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," Microsoft CFO Chris Liddell said in a statement.

Mr. Liddell said the company is planning for economic uncertainty while addressing its current cost structure.

"In this environment, we will focus on outperforming our competitors and addressing our cost structure," Liddell said.