Microsoft announces job cuts

January 23, 2009 // 8:59 a.m.

Tags: #apple #credit-crunch #earnings #financial #job-losses #layoffs #lg #lg-electronics #microsoft #nokia

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.
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