There has been much speculation regarding job losses at Microsoft of late, and now the truth is out. Thankfully the scale of the damage is not as great as at first feared, and nowhere near the 15,000 job losses talked about recently.
It would seem that 1400 jobs are to be axed with immediate effect, impacting most every part of the Microsoft operation from R&D to marketing, finance and sales. A further 3600 jobs will go during the coming 18 months, making a total of 5000 staff feeling the chop.
As a result, Microsoft hopes to save in the region of $1.5 billion in annual operating expenses, and boy does it need to find that money. The latest quarterly results are not good, with a fall in net profit of 11 percent.
So in the same week that we learn how Microsoft wants to know what you do when you poo we now discover it is up to it's neck in it, so to speak.
Here's what Monkey Dancing CEO Steve Ballmer had to say in an email to Microsoft staff on the matter entitled: Realigning Resources and Reducing Costs.
"In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business. I want to tell you about what we're doing and why. Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 per cent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations."
The email continues "Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures. Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs."
And eventually he gets to the point, revealing that "As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today."
And how is Ballmer going to increase efficiency to save cash? He answers that with "We'll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We've scaled back Puget Sound campus expansion and reduced marketing budgets. We'll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year."
Ballmer admits that "The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company's cost structure so that we have the resources to drive future profitable growth."
