Thursday, January 22, 2009
Jan. 22 (Bloomberg) — Microsoft Corp. will cut as many as 5,000 jobs, the first companywide firings in its 34-year history, and said sales and profit will probably drop as the recession eats into software demand. The stock fell as much as 9.7 percent.
The reductions, about 5 percent of the workforce, will take place in almost all areas and help save $1.5 billion a year, the company said today in a statement. Microsoft also posted second- quarter sales and profit that missed projections, prompting the company to pull its full-year forecast.
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Chief Executive Officer Steve Ballmer is under pressure to reduce costs as sales growth dries up in what may be the worst recession since World War II. Microsoft’s Windows division, about a quarter of revenue, is suffering a sales decline that surprised the company as personal-computer shipments rose at the slowest rate in six years in the fourth quarter.
“People aren’t buying PCs,” said Kimberly Caughey, senior equity analyst at Fort Pitt Capital Group Inc. in Pittsburgh, which owns 361,685 Microsoft shares. “They’re taking quick action to right-size their company. This is really only 22 days after the close of the quarter, and they must see deteriorating conditions.”
Full story here.