From Times Online
Software giant will make first company-wide job cuts in its history as economic downturn hits its second-quarter profits
Murad Ahmed
Microsoft announced today that it will eliminate 5,000 jobs worldwide, the first company-wide cuts in its history.
The software giant said that posts will go from nearly all its departments, including research and development, marketing, sales, finance, legal, human resources and information technology, over the next 18 months with 1,400 jobs going immediately.
Up to 60 jobs are at risk in the UK from a workforce of about 2,900. The company believe the cost cutting measures will save the company about $1.5 billion annually.
The company had about 95,000 employees at the end of September, an increase of 55 per cent since June 2005. Microsoft has previously made job cuts but they were small in number and limited to a single department or product.
The shares fell $1.42, or 7.3 per cent, to $17.96 in early trading in New York today.
The redundancies were announced as the group posted disappointing quarterly results that missed analysts’ expectations.
The company made a profit of $4.17 billion (£303 billion), or 47 cents per share, in its second-quarter ended December 31, compared with a profit of $4.71 billion, or 50 cents, a year earlier.
Analysts were expecting earnings per share of 49 cents.
Steve Ballmer, the chief executive of Microsoft, has been under pressure to cut costs as the global recession stems demand for software. The company said that the disappointing profit reflected the current weakness of the PC market, and a continued shift towards lower-priced netbooks.
“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,” Mr Ballmer said.
“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.”
The company said that, because of the market’s current volatility, it was unable to offer profit forecasts for the rest of the year.
Courtesy: timesonline.co.uk
