Microsoft can’t escape bad economy, cutting 5,000 jobs in first ever layoffs

As further proof that the weakening worldwide economy is taking its toll on everyone, Microsoft announced Thursday (January 22, 2009) it is cutting 5,000 jobs. The computing giant has made limited staff cuts after purchasing other companies but these are the first actual layoffs in Microsoft’s history.

The layoffs are the result of an 11 percent drop in second-quarter profits, but CEO Steve Ballmer refused to call this a “recession.” Instead, Ballmer said the economy is “resetting to a lower level of business and consumer spending based largely on the reduced leverage in economy.”

Um, does anyone here speak CEO, because I have no idea what that means.

Seeing that this was coming, Ballmer said the company slashed $600 million in operating expenses during the quarter but still couldn’t prevent layoffs.

Another problem for Microsoft is that consumers are flocking to the cheaper “netbook” style of PC, which runs Windows XP instead of Vista. The company makes most of its profits through sales of Windows and the products associated with its Office software and all those sales are down. The cuts started with 1,400 on Thursday affecting departments including research and development, marketing, sales, finance, legal and corporate affairs, human resources and information technology. Those are taking place mainly in the company’s corporate headquarters in Redmond, Washington.

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