Microsoft to slash 5,000 jobs

US software giant Microsoft announced on Thursday it was cutting up to 5,000 jobs over the next 18 months including 1,400 immediately due to a slowing economy and weak spending on technology.


Releasing its results for the second quarter of its fiscal year, Microsoft said net profit fell by 11 percent from a year ago to 4.17 billion dollars on revenue of 16.63 billion dollars, a two percent increase over a a year ago.

The Redmond, Washington-based company said earnings per share were 47 cents, less than the 49 cents per share forecast by analysts.

“In light of the further deterioration of global economic conditions,” Microsoft said it was eliminating “up to 5,000 jobs in R&D (research and development), marketing, sales, finance, legal, HR (human resources), and IT (information technology) over the next 18 months, including 1,400 jobs today.”

The world\’s biggest software firm said the jobs cuts were among various steps to manage costs “including the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing.”

“These initiatives will reduce the company\’s annual operating expense run rate by approximately 1.5 billion dollars and reduce fiscal year 2009 capital expenditures by 700 million dollars,” Microsoft said.

“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,” chief executive Steve Ballmer said in a statement.

“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,” he said.

Microsoft chief financial officer Chris Liddell said “economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact.

“We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year,” he said.

Microsoft\’s share price fell 7.12 percent to 18 dollars in electronic trading ahead of the opening bell on Wall Street.