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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.

 

  Company Layoffs
April 3M 2,300
Month Total Apple 1,600
14,420 Lexmark 270
  National Semiconductor 1,725
  Nokia 450
  Sony Ericsson 2,000
  Sun Microsystems 1,500
  Toshiba 3,900
  Yahoo 675
     
March  Agilent Technologies 2,700
Month Total Dell  150
12,731 Garmin  181
  Google 200
  IBM  5,000
  Micron Technologies  2,000
  Nokia  1,700
  Northrup Grumman  750
  Sonus Networks  50
     
February Agilent Technologies 600
Month Total AMCC 100
33,868 Cisco 2,000
  Electronic Arts 1,100
  Marvell Semiconductor 46
  Micron Technology 2,000
  NetApp 480
  Nokia 625
  Panasonic 15,000
  Pentair Electronic Packaging 174
  Pioneer 10,000
  Razorfish 70
  STEC Inc 35
  THQ 600
  Western Digital 22
  Xyratex International, Inc. 311
  Yahoo 705
     
January AMD 1,100
Month Total AOL 700
124,320 Attachmate 120
  Autodesk 750
  BlueArc 21
  Bose 1,000
  Circuit City 34,000
  Citrix 460
  Coremetrics 29
  Dell 1,900
  Electoronic Arts 600
  EMC 2,400
  Ericsson 5,000
  Google 100
  Google (contractors) 5,000
  Hitachi 7,000
  IBM 2,850
  Intel 6,000
  Kronos 260
  Lenovo 2,500
  Lexmark 375
  Logitech 500
  Microsoft 5,000
  Motorola 4,000
  NEC 20,000
  Nokia 1,000
  Oracle 500
  Philips 6,000
  SAP 300
  Seagate 800
  Sprint/Nextel 8,000
  Sun 1,300
  Texas Instruments 3,400
  Unisys 1,300
  WatchGuard 55
     
December Intrinsyc 95
Month Total Adobe Systems 600
13,095 Sage North America 150
  AT&T 12,000
  Windstream 170
  Lexmark International 80
     
November Kodak 150
Month Total Spot Runner 115
21,433 Nortel Networks 1,300
  Motorola 3,000
  Nokia 600
  Tektronix 150
  Cadence 625
  AMD 500
  SanDisk 450
  BitTorrent 18
  Insight 240
  Circuit City 3,400
  Imation 200
  Applied Materials 1,800
  National Semiconductor 330
  Sun Microsystems 6,000
  Epicor 300
  KLA-Tencor 900
  Pillar Data Systems 150
  Lawson Software 200
  Lam Research 600
  Akamai 110
  Palm 105
  Quantum 180
  Fring 10
     
October Micron 353
Month Total: Qimonda 3,000
46,281 Jive Software 40
  Actel 60
  Sony Ericsson 2,000
  MPC Computers 200
  Lenovo 50
  Jaxtr 13
  Texas Instruments 300
  Softchoice 65
  Manhattan Associates 150
  HP 24,600
  Dell 8,900
  Xerox 3,000
  ADC Telecoms 325
  BroadSoft 12
  Symantec 788
  Freescale 2,400
  Aliph 25