Microsoft Cuts 5,000 Jobs, Almost 6 Percent of Workforce

1/22/09Follow @xconomy

Microsoft’s long-rumored job cuts are now official: 5,000 employees will be losing their jobs. The Redmond, WA-based software giant (NASDAQ: MSFT) said today in its quarterly earnings report that it is eliminating those positions over the next 18 months, which amounts to almost six percent of its workforce of 90,000 employees.

About 1,400 people are losing their jobs today, the company said in a statement. The cuts span a range of departments, including R&D, marketing, sales, finance, legal, human resources, and information technology.

The cuts are tied directly to a decline in Microsoft’s business. The company reported a profit of $4.17 billion in the most recent quarter, an 11 percent drop from the same period a year ago. To compensate for that, Microsoft hopes the job cuts will reduce annual operating expenses by $1.5 billion and its capital spending in fiscal 2009 by $700 million.

“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,” said Steve Ballmer, chief executive officer at Microsoft. “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.”

While Ballmer said he was confident in the statement, the company didn’t go so far as to offer Wall Street a forecast for revenue or profits for the rest of 2009. Microsoft’s stock dropped 7 percent to $18.02 at 10 am Eastern time.

Microsoft plans to discuss the quarterly performance, and spending cuts, on a conference call with investors at 8 am Pacific/11 am Eastern.

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