Microsoft adjusts to recession with 5,000 job losses

by Stevie Smith - Jan 22 2009, 15:04

American software company Microsoft Corp. has today announced it will cut some 5,000 jobs from its international workforce, confirming recent speculation suggesting the tech heavyweight needs to restructure in order to fend of the pressures of recession.

While the rumoured 15,000 job losses have not thus-far materialised, Microsoft has said 1,400 employees will be cut immediately, with a further 3,600 expected to go over the course of the next 18 months.

According to the Redmond-based giant, its decision to wield the employment axe has come about due to gloomy economic conditions and declining sales momentum in a weakening PC market that’s shifting towards more wallet-friendly notebook hardware.

“Economic activity and IT spend slowed beyond our expectations in the quarter,” commented Microsoft CFO Chris Liddell in statement to Reuters. “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 terms of negative fiscal effects, Microsoft has reported a quarterly profit fall of 11 percent, which equates to $4.17 billion USD when measured against the $4.71 billion USD it posted during the same period in 2007.

The job cuts, which should save approximately $1.5 billion USD in operating costs, will affect various Microsoft departments including finance, human resources, IT, legal, marketing, R&D and sales.

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