Microsoft May Cut Deeper into Work Force

By Lawrence Walsh  |  Posted 2009-05-06 Email Print this article Print
 
 
 
 
 
 
 

While slashing 5,000 jobs will help Microsoft save more than $1 billion in operating expenses, CEO Steve Ballmer says it may not be enough to offset sales and revenue declines caused by the recession and services competition.

Microsoft’s elimination of more than 5,000 jobs has righted the software ship that has floundered under the weight of the economic recession. But, Microsoft executives say that it may not be enough to sustain the health of the software giant if the economy doesn’t improve.

Yesterday, Microsoft executed the layoff of another 3,000 employees as part of a larger reduction in work force announced in January. The total number laid off by Microsoft to date totals somewhere above 4,200 employees, about half in the United States.

The job cuts are distributed across all divisions, Microsoft said. It's unclear what impact--if any--the layoffs will have on Microsoft's massive channel program.

Microsoft executives say they were forced into the company’s first work force reduction because of declining sales that impacted revenue and profits. First quarter sales for Microsoft were $13.65 billion and profits were roughly $3 billion. While impressive numbers, profitability is down roughly one-third of a normal quarter.

Microsoft’s sales and business is being assaulted on multiple fronts. The sluggishness of Windows Vista, the beleaguered and much maligned operating system, is prompting enterprises to wait for Windows 7 to upgrade from the more popular Windows XP. The search business—Windows Live—struggles to compete against Google. And the economic slowdown is driving more businesses and end users to adopt software-as-a-service applications rather than expensive, client-based applications that have made Microsoft rich.

Given the myriad troubles facing the software giant, CEO Steve Ballmer in an e-mail to employees left the door open to more job cuts.

"As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and, if necessary, take further actions on our cost structure including additional job eliminations," Ballmer stated.

Microsoft announced the layoffs in January; they are part of a plan to eliminate more than $1 billion in operating expenses. The layoffs were planned to happen in stages over 18 months, but the company accelerated the job cuts because of the impact on employee morale.

"We are moving quickly to reach this target in response to consistent feedback from our people and business groups that it's important," Ballmer wrote.
The work force reduction is distributed across Microsoft operations, and every division is affected, the company said.

While 5,000 jobs is a significant reduction, it represents only 4 percent of Microsoft’s total work force. Microsoft grew its work force substantially over the last decade, increasing its employee base from 31,000 in 1999 to more than 95,000 today.

According to Securities and Exchange Commission filings, Microsoft will spend more than $525 million to execute the layoffs.

Since October, the technology sector has shed more than 266,000 jobs as blue chip companies such as Microsoft, Google, IBM and Sun Microsystems shrink their work forces.

The following is a list of major job reductions over the last seven months.

 

 CompanyLayoffs
April3M2,300
Month TotalApple1,600
14,420Lexmark270
 National Semiconductor1,725
 Nokia450
 Sony Ericsson2,000
 Sun Microsystems1,500
 Toshiba3,900
 Yahoo675
   
March Agilent Technologies2,700
Month TotalDell 150
12,731Garmin 181
 Google200
 IBM 5,000
 Micron Technologies 2,000
 Nokia 1,700
 Northrup Grumman 750
 Sonus Networks 50
   
FebruaryAgilent Technologies600
Month TotalAMCC100
33,868Cisco2,000
 Electronic Arts1,100
 Marvell Semiconductor46
 Micron Technology2,000
 NetApp480
 Nokia625
 Panasonic15,000
 Pentair Electronic Packaging174
 Pioneer10,000
 Razorfish70
 STEC Inc35
 THQ600
 Western Digital22
 Xyratex International, Inc.311
 Yahoo705
   
JanuaryAMD1,100
Month TotalAOL700
124,320Attachmate120
 Autodesk750
 BlueArc21
 Bose1,000
 Circuit City34,000
 Citrix460
 Coremetrics29
 Dell1,900
 Electoronic Arts600
 EMC2,400
 Ericsson5,000
 Google100
 Google (contractors)5,000
 Hitachi7,000
 IBM2,850
 Intel6,000
 Kronos260
 Lenovo2,500
 Lexmark375
 Logitech500
 Microsoft5,000
 Motorola4,000
 NEC20,000
 Nokia1,000
 Oracle500
 Philips6,000
 SAP300
 Seagate800
 Sprint/Nextel8,000
 Sun1,300
 Texas Instruments3,400
 Unisys1,300
 WatchGuard55
   
DecemberIntrinsyc95
Month TotalAdobe Systems600
13,095Sage North America150
 AT&T12,000
 Windstream170
 Lexmark International80
   
NovemberKodak150
Month TotalSpot Runner115
21,433Nortel Networks1,300
 Motorola3,000
 Nokia600
 Tektronix150
 Cadence625
 AMD500
 SanDisk450
 BitTorrent18
 Insight240
 Circuit City3,400
 Imation200
 Applied Materials1,800
 National Semiconductor330
 Sun Microsystems6,000
 Epicor300
 KLA-Tencor900
 Pillar Data Systems150
 Lawson Software200
 Lam Research600
 Akamai110
 Palm105
 Quantum180
 Fring10
   
OctoberMicron353
Month Total:Qimonda3,000
46,281Jive Software40
 Actel60
 Sony Ericsson2,000
 MPC Computers200
 Lenovo50
 Jaxtr13
 Texas Instruments300
 Softchoice65
 Manhattan Associates150
 HP24,600
 Dell8,900
 Xerox3,000
 ADC Telecoms325
 BroadSoft12
 Symantec788
 Freescale2,400
 Aliph25

 

 

 


 

 
 
 
 
Lawrence Walsh Lawrence Walsh is editor of Baseline magazine, overseeing print and online editorial content and the strategic direction of the publication. He is also a regular columnist for Ziff Davis Enterprise's Channel Insider. Mr. Walsh is well versed in IT technology and issues, and he is an expert in IT security technologies and policies, managed services, business intelligence software and IT reseller channels. An award-winning journalist, Mr. Walsh has served as editor of CMP Technology's VARBusiness and GovernmentVAR magazines, and TechTarget's Information Security magazine. He has written hundreds of articles, analyses and commentaries on the development of reseller businesses, the IT marketplace and managed services, as well as information security policy, strategy and technology. Prior to his magazine career, Mr. Walsh was a newspaper editor and reporter, having held editorial positions at the Boston Globe, MetroWest Daily News, Brockton Enterprise and Community Newspaper Company.
 
 
 
 
 
























 
 
 
 
 
 

Submit a Comment

Loading Comments...
























 
 
 
 
 
 
 
 
 
Thanks for your registration, follow us on our social networks to keep up-to-date