Microsoft is Going to Cut 5000 Jobs Due to an Unexpected Share Loss

NEW YORK — Microsoft Corp is now planning to slash up to 5000 employees due to the fall of their share’s value. Company is very disappointing with the result of the Wall Street. These results are based on the current result of revenue till last two quarters.

microsoft_logo_robertscoble_1The world’s largest software making company, which had never expected to report result until after the close of trading on Thursday, sent shock waves across financial markets pulling down the Nasdaq, and sending U.S. Treasury debt prices higher as investors sought safer assets.

Company’s share dropped as much as 11 percent to their lowest level since January 1998, adding to a 40 percent decline in the past years.

Microsoft has given the reason for this to the weak PC market and the popularity of the low netbook computers, which have combined to badly undercut sales of it’s Windows operating system.

“Our financial position is solid … but it is also clear that we are not immune to the effects of the economy,” Chief Executive Steve Ballmer told employees in a letter. “Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.”

“It is pretty bad when things are deteriorating so fast that even the largest companies in the world don’t know how rapidly it is happening,” said Jefferies analyst Katherine Egbert.

Microsoft posted a profit of $4.17 billion, or 47 cents per share, in its fiscal second quarter ended December 31, versus a profit of $4.71 billion, or 50 cents per share, a year earlier. Analysts were looking for earnings of 49 cents per share, according to Source Estimates.

Revenue rose 2 percent to $16.63 billion, missing the average analyst forecast of $17.1 billion. Sales in the Windows segment fell 8 percent, while its Business division, responsible for the Office software package, marked a 1 percent increase. Revenue at the unit that makes the popular 360 Xbox gaming system rose 3 percent. Looking ahead, the Windows business is expected to perform in line with the weak traditional PC market, Microsoft said.

BIGGEST JOB CUTS EVER

Microsoft’s staggered elimination of 5,000 jobs — 1,400 immediately and the rest over 18 months — amounts to about 5 percent of its estimated 96,000 work force, the biggest reduction ever by the software maker. Other cost cuts include travel and marketing budgets, and the roster of independent contractors.

“Clearly business conditions are worse than people were expecting,” said Richard Williams, analyst at Cross Research. “This is a substantial amount of jobs cuts. Microsoft has never had a layoff like this in my knowledge and it’s sending a signal that the times are definitely changing.”

The job cuts follow similar moves by other technology firms, including AT&T Inc, Dell Inc, Motorola Inc and Advanced Micro Devices Inc, all of which are suffering from the global economic slowdown.

Leave a Reply

Your email address will not be published. Required fields are marked *