Microsoft to shed 5,000 staff

Published on Thursday 22 January 2009 20:40

MICROSOFT has announced that it is to axe up to 5,000 jobs, with 1,400 to go with immediate effect.

The US software giant said the rest would go over the next 18 months, after it suffered an 11 per cent drop in profit for its latest quarter.

The job losses involve less than 2 per cent of its UK workforce of about 2,900 – fewer than 60 people – according to the company.

A spokesman would not put a figure on how the further cuts would affect UK staff, who work in Edinburgh – where Microsoft has its Scottish HQ – London, Reading, Manchester Cambridge and Chertsey, Surrey.

The group said it was removing jobs in its research and development, marketing, sales, finance, legal, HR and IT departments after economic activity slowed more than it had expected.

Microsoft said it was "not immune" to the effects of the economy, revealing that client revenues fell 8 per cent because of the weakness of the PC market and customers' shift to cheaper Netbook computers.

The job cuts are part of cost-saving efforts that will reduce yearly operating costs by about $1.5 billion (1.1bn), it said.

Warning of volatile market conditions ahead, the company said it would focus on outperforming its competitors and addressing its costs.

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."

The company's net income – its profit – was $4.17bn (3.02bn) for the quarter, down from $4.71bn for the same period the previous year.

he lay-offs are thought to be a first for Microsoft, aside from limited staff cuts it has made after acquiring other companies.