More people will be walking around unemployed as the harsh economic environment hits Microsoft.
The software giant on Thursday announced it would eliminate 1400 jobs today and up to 5000 over the next 18 months. The initiatives will save the company $1.5 billion a year.
The news came at the same time the software giant reported disappointing second-quarter results. The job cuts will come from R&D, marketing, sales, finance, legal, HR and IT.
Here’s a memo from Steve Ballmer, that was posted by Kara Swisher of AllThingsD:
From: Steve Ballmer
To: All Microsoft FTE
Subject: Realigning Resources and Reducing Costs
In response to the realities of a deteriorating economy, we’re
taking important steps to realign Microsoft’s business. I want to tell
you about what we’re doing and why.
Today we announced second quarter revenue of $16.6 billion. This
number is an increase of just 2 percent compared with the second
quarter of last year and it is approximately $900 million below our
earlier expectations.
The fact that we are growing at all during the worst recession
in two generations reflects our strong business fundamentals and is a
testament to your hard work. Our products provide great value to our
customers. Our financial position is solid. We have made long-term
investments that continue to pay off.
But it is also clear that we are not immune to the effects of
the economy. Consumers and businesses have reined in spending, which is
affecting PC shipments and IT expenditures.
Our response to this environment must combine a commitment to
long-term investments in innovation with prompt action to reduce our
costs.
During the second quarter we started down the right path. As the
economy deteriorated, we acted quickly. As a result, we reduced
operating expenses during the quarter by $600 million. I appreciate the
agility you have shown in enabling us to achieve this result.
Now we need to do more. We must make adjustments to ensure that
our investments are tightly aligned with current and future revenue
opportunities. The current environment requires that we continue to
increase our efficiency.
As part of the process of adjustments, we will eliminate up to
5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT
over the next 18 months, of which 1,400 will occur today. We’ll also
open new positions to support key investment areas during this same
period of time. Our net headcount in these functions will decline by
2,000 to 3,000 over the next 18 months. In addition, our workforce in
support, consulting, operations, billing, manufacturing, and data
center operations will continue to change in direct response to
customer needs.
Our leaders all have specific goals to manage costs prudently
and thoughtfully. They have the flexibility to adjust the size of their
teams so they are appropriately matched to revenue potential, to add
headcount where they need to increase investments in order to ensure
future success, and to drive efficiency.
To increase efficiency, we’re taking a series of aggressive
steps. We’ll cut travel expenditures 20 percent and make significant
reductions in spending on vendors and contingent staff. We’ve scaled
back Puget Sound campus expansion and reduced marketing budgets. We’ll
also reduce costs by eliminating merit increases for FY10 that would
have taken effect in September of this calendar year.
Each of these steps will be difficult. Our priority remains
doing right by our customers and our employees. For employees who are
directly affected, I know this will be a difficult time for you and I
want to assure you that we will provide help and support during this
transition. We have established an outplacement center in the Puget
Sound region and we’ll provide outplacement services in many other
locations to help you find new jobs. Some of you may find jobs
internally. For those who don’t, we will also offer severance pay and
other benefits.
The decision to eliminate jobs is a very difficult one. Our
people are the foundation of everything we have achieved and we place
the highest value on the commitment and hard work that you have
dedicated to building this company. But we believe these job
eliminations are crucial to our ability to adjust the company’s cost
structure so that we have the resources to drive future profitable
growth.
I encourage you to attend tomorrow’s Town Hall at 9am PST in Café 34 or watch the webcast.
While this is the most challenging economic climate we have ever
faced, I want to reiterate my confidence in the strength of our
competitive position and soundness of our approach.
With these changes in place, I feel confident that we will have
the resources we need to continue to invest in long-term computing
trends that offer the greatest opportunity to deliver value to our
customers and shareholders, benefit to society, and growth for
Microsoft.
With our approach to investing for the long term and managing
our expenses, I know Microsoft will emerge an even stronger industry
leader than it is today.
Thank you for your continued commitment and hard work.
Steve
(Image source: Topvoipnews)
