The credit crunch continues to hit some big names in the technology sector, with Microsoft announcing a drop in earnings bad enough to prompt 5,000 job losses.
As reported by CNN Money
yesterday, Microsoft announced its earnings report for its second financial quarter ahead of schedule – and the news wasn't good. Earnings per share were down at 47 cents, compared to 50 cents last year – analysts were hoping for at least 49 cents even in the current financial climates.
While change might not seem that much of a big deal, the sheer size of the company means that the 3 cent per share income drop equates to a year-on-year drop of $530 million – and that's enough to get investors worried. A slide in share price which started twelve months ago accelerated with the news, dropping a further 8 percent to trade at the lowest price in ten years.
In order to turn things around, the company's CEO, Steve Ballmer, announced that up to 5,000 jobs would be going – but no products would be cut. According to CNet
, the company will retain its current product portfolio with Ballmer claiming that “the board [of directors] likes our portfolio.
” The job news remains bleak, however: although the company is hoping expansion in several areas will create new jobs, it has already eliminated 1,400 staff according to figures obtained by ComputerWorld
. Cuts will continue over the next eighteen months, with around 5,000 positions due to be eliminated at the company – but Ballmer is confident that “we [will be] adding a few thousand jobs.
It's not just Microsoft that is having to make some tough decisions to get it through the current financial doldrums – aside from the company's we've already commented on, LG Electronics has announced
a $487 million loss while Finnish mobile giant Nokia ffaced
a 69 percent drop in profit over the last financial quarter. Clearly, the technology sector is still in for a bumpy ride. That said, some companies aren't doing too badly – despite the general gloom, Apple has seen its stock soar by seven percent after a particularly good earnings report this week, according to The Unofficial Apple Weblog
Do you think Microsoft should have eliminated or sold some of its non-core product lines before cutting so many jobs, or is the company doing the best it can to get investor confidence back? Share your thoughts over in the forums