Microsoft announced its second quarter results today and as many had predicted there are some job cuts involved.
Microsoft will eliminate up to 5,000 jobs in R&D, marketing, sales, finance, legal, HR, and IT over the next 18 months, including 1,400 jobs today. It"s expected the job cuts will reduce the company"s annual operating expense run rate by approximately $1.5 billion.
Microsoft claims client revenue declined 8% as a result of PC market weakness and consumers purchasing lower priced netbooks. Entertainment and Devices revenue grew 3% driven by a high demand for Xbox 360 consoles over the Christmas perioud, with a record 6 million units sold in the quarter.
In a statement direct from Microsoft, Microsoft CEO Steve Ballmer said "We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today."
In a memo to employees, Ballmer said "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." He also mentions Microsoft"s cost cutting, "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."
Microsoft shares are currently trading 6.86% down at the time of writing.