Australia appears to have largely escaped the Microsoft job cuts announced overnight, with just a single worker losing their spot.
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
Microsoft CFO Chris Liddell
Redmond globally said overnight it would cut up to 5,000 jobs, or 5 per cent 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.
But locally, sources told ZDNet.com.au, only a single worker had lost their role, with the rest of Microsoft Australia remaining unscathed.
Amid slow PC sales, revenue for the quarter came in at US$16.63 billion for its fiscal second quarter that ended December 31, up just 2 per cent from a year ago and roughly US$900 million less than the company previously projected. Per-share earnings came in at 47 US cents, also below forecasts.
Sales in the Windows unit were down 8 per cent, 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.
"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," Chief Financial Officer Chris Liddell said in a statement.
"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. In this environment, we will focus on outperforming our competitors and addressing our cost structure."
In its press release, the company said that "due to the volatility of market conditions, going forward, Microsoft is no longer able to offer quantitative revenue and (earnings per share) guidance for the balance of this fiscal year." It said it expects its operating expenses to be about US$27.4 billion for its full year ending June 30.
The layoffs are the first across-the-board reductions in Microsoft's ranks in its history, though it has cut jobs in certain areas or locations in the past. Although Microsoft plans to cut 5,000 jobs in total, its overall workforce is not expected to drop that much, as it continues to hire — albeit at a lower rate — in key areas. Overall, CEO Steve Ballmer said in an email to workers that the total workforce will probably drop by 2,000 to 3,000 jobs.
Jobs eliminated include positions in product research and development, sales, HR, legal, finance, information technology and other areas. Rumors of the cuts had been growing over the past month or so, with some reports suggesting the company could slash more than 15 per cent of its workforce and others holding out hope the company could trim costs without laying off full time workers. Fears heightened on Wednesday in the US when workers found themselves unable to access the company's internal, online organisational chart.
The cost-cutting moves, which also include delaying raises and further cuts to its vendor and contractor ranks, should cut its annual operating expenses by US$1.5 billion and reduce fiscal-year 2009 capital expenditures by US$700 million, Microsoft said.
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