JANUARY 15, 2009 In Rare Move, Microsoft Is Exploring Job Cuts
By NICK WINGFIELD Wall Street Journal http://online.wsj.com/article/SB123197886745683743.html Microsoft Corp. is seriously exploring significant work force reductions that could be announced as early as next week, in a sign that the weak economy is prompting tough decisions even at one of the steadiest ships in the technology industry. According to people familiar with its plans, the Redmond, Wash., giant is considering layoffs across its various divisions, a rare occurrence for the world's largest software company. However, plans for the cutbacks are still in flux and Microsoft could end up finding alternative methods of reining in costs, one of these people said. Although the number of potential job cuts couldn't be learned, people familiar with the matter said they are likely to be far less than the 15,000 positions that have been rumored in recent weeks, a figure that would amount to more than 16% of Microsoft's global work force. In an interview last week, Microsoft CEO Steve Ballmer declined to say whether the company was planning layoffs, though he said the economy is forcing Microsoft to think seriously about cost cutting measures. "We're finding our right balance," Mr. Ballmer said. "When we find it, I'm sure we'll communicate that publicly." Mr. Ballmer added that deep retrenchments were unlikely. "That's not our company culture," he said. Microsoft might announce the job cuts when it reports its financial results for the holiday quarter, planned for next Thursday. When it reported its last quarterly results in October, Microsoft said the weakening economy was prompting it to slow its hiring and cut other costs, such as travel expenses. Large work force reductions have been nearly unheard of throughout Microsoft's more than three decades in business. At times, the company has made isolated job cuts, sometimes following acquisitions of other companies, and it routinely terminates underachieving workers. Overall though, the company's headcount has steadily risen to more than 91,000 employees in the fiscal year ended last June from over 31,000 in June 1999. Microsoft's headcount growth between its 2007 and 2008 fiscal years was particularly sharp, rising by more than 12,000 people, or 15%, in one year. The surge, though, mirrored an 18% rise in Microsoft's revenue to $60.42 billion in fiscal 2008 from $51.12 billion in fiscal 2007. Now the weak economy is seriously hurting spending on information technology, and along with it Microsoft's business. Analysts surveyed by Thomson Reuters currently expect the company to post only 5% revenue growth in fiscal 2009. Already, a number of leading technology companies have announced layoffs, including Hewlett-Packard Co., Yahoo Inc., Sun Microsystems Inc. and EMC Corp. Microsoft remains in a better position than many of its peers to weather the downturn, because of its huge coffers, stocked with more than $20 billion in cash and short term investments at the end of September, and the long-term contracts it has to supply many corporate customers with software products. Microsoft is expected to continue to invest in its Internet business, for example, by possibly pursuing a deal to acquire Yahoo's search engine. -- ================================ George Antunes, Political Science Dept University of Houston; Houston, TX 77204 Voice: 713-743-3923 Fax: 713-743-3927 Mail: antunes at uh dot edu *********************************** * POST TO [email protected] * *********************************** Medianews mailing list [email protected] http://lists.etskywarn.net/mailman/listinfo/medianews
