Microsoft said Thursday its sales and earnings for the December quarter fell well below expectations and announced a series of cost-cutting moves, including its first-ever companywide layoffs
The software maker said it will cut up to 5,000 jobs, or 5 percent of its workforce, over the next 18 months. About 1,400 jobs were eliminated immediately. The software maker is also paring other expenses, such as delaying salary increases and cutting back on vendors and contractors.
Amid slow PC sales, revenue for the quarter came in at $16.63 billion for its fiscal second quarter that ended December 31, up just 2 percent from a year ago and roughly $900 million less than the company previously projected. Per-share earnings came in at 47 cents, also below forecasts.
Sales in the Windows unit were down 8 percent, amid not only a drop in PC unit sales but also a shift to lower-price Netbooks, for which Microsoft receives less money. The drop in Windows sales was partially offset by strength in the company’s server and Xbox divisions.
You know things are bad when even Microsoft, with billions on hand, is cutting back its work force.
It can probably be said that most companies could cut 5% of their work force right now and not notice a loss in productivity. While it would be tough, it would probably be good for the company in the long run.
I can still recall some of my early days at my last job. After being there for 9 months, we had black tuesday. 1⁄2 of the company was let go. We went from 5 full time devs to 2.5. It was pretty rough to see those guys go. But in the end, we came out a smaller, leaner, profitable company. We were able to get through the tough times, add a few more people and continue to do more with less. Was it tough? Hell yeah! But in the long run, it was the right decision.
I have to give my former boss a lot of credit. He took us through some tough times but kept the company a float. There is a lot to be said about that.