Microsoft to cut 5,000 jobs as net income falls

Microsoft's revenue rose 2 percent for the quarter ended Dec. 31, but net income fell 11 percent, and 5,000 jobs are being cut, it said Thursday.

Illustrating current economic woes, Microsoft had a disappointing second quarter, with revenue dropping in its important Windows operating system business.

Overall, Microsoft's revenue rose 2 percent for the quarter that ended Dec. 31, but net income fell 11 percent compared to the year-earlier period, it said Thursday. The company made a net profit of US$4.17 billion on revenue of US$16.6 billion in the quarter. Microsoft reported US$0.47 earnings per share, below analyst projections.

Microsoft was expected to post earnings per share of US$0.49, on revenue of US$17.08 billion, according to the consensus expectation from analysts polled by Thomson Reuters.

Microsoft also said it will cut up to 5,000 jobs in research and development, marketing, sales, finance, legal, human resources and IT over the next 18 months. The first 1,400 jobs will be cut on Thursday.

Microsoft projected that the job cuts will trim its annual operating expense run rate by US$1.5 billion and reduce its fiscal 2009 capital expenditures by US$700 million.

The layoffs are being implemented due to IT spending that fell lower than the company's expectations for the quarter. Microsoft said in a statement that it "acted quickly" to reduce its costs.

Microsoft warned that its revenue and earnings for the second half of the year relative to the previous year will be "almost certainly" lower.

The company said it can't provide quantitative revenue and earnings-per-share guidance for the rest of the year due to "the volatility of market conditions."

After the results were announced, Microsoft's share price fell to around US$18.05, down US$1.31 in early-morning trading.

Software client revenue fell 8 percent, as PC sales slumped and buyers turned to low-cost netbooks, the company said. Annual software license fees pushed server and software tool revenue up 15 percent, while entertainment and devices revenue grew 3 percent on the back of holiday demand for the Xbox game console.

An earnings call with CEO Steve Ballmer is scheduled for 11 a.m. Eastern Time.

(Peter Sayer in Paris and Marc Ferranti in New York contributed to this report.)

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags financial resultsjob cuts

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Jeremy Kirk

IDG News Service
Show Comments

Brand Post

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Luke Hill

MSI GT75 TITAN

I need power and lots of it. As a Front End Web developer anything less just won’t cut it which is why the MSI GT75 is an outstanding laptop for me. It’s a sleek and futuristic looking, high quality, beast that has a touch of sci-fi flare about it.

Emily Tyson

MSI GE63 Raider

If you’re looking to invest in your next work horse laptop for work or home use, you can’t go wrong with the MSI GE63.

Laura Johnston

MSI GS65 Stealth Thin

If you can afford the price tag, it is well worth the money. It out performs any other laptop I have tried for gaming, and the transportable design and incredible display also make it ideal for work.

Andrew Teoh

Brother MFC-L9570CDW Multifunction Printer

Touch screen visibility and operation was great and easy to navigate. Each menu and sub-menu was in an understandable order and category

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?