Microsoft cutting 5,000 jobs, sadface emoticons abound
posted January 22nd 2009 10:34AM
From: Steve Ballmer
To: All Microsoft FTE
Subject: Realigning Resources and Reducing Costs
In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business. I want to tell you about what we're doing and why.
Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.
The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.
But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.
Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.
During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.
Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.
As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We'll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.
Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.
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.
Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we'll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don't, we will also offer severance pay and other benefits.
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.
I encourage you to attend tomorrow's Town Hall at 9am PST in Café 34 or watch the webcast.
While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.
With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.
With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.
Thank you for your continued commitment and hard work.
Steve
I don't think it will get better for Microsoft in the short term:
Their cash cows of Windows and Office are going to be further eroded by offerings from the like of Apple and Google
Their server business should remain strong, but are they over investing based on expected returns?
Windows Mobile to me, now seems like the third or fourth most attractive mobile OS compared to the best just two years ago
IE is losing a percent of market share a month! I don't think that's a good thing.
If Apple continues to have record profits over the next couple of quarters, I hope someone calls out Steve on blaming the economy.
OpenOffice.org + Thunderbird + Ubuntu
That's like saying 'watch out detroit, here comes the segway'
4 billion profit...whos complaining really? pfft
At MSFT there are about 1000 employees, "partners," who enjoy about 50% of the compensation doled out each year. I think there is a way you could lay off about 500 people and attain excellent cost savings.
But somehow I'm sure the grunts will take it in the ass and the "partners" will continue to enjoy their accountability free $1mil+ compensation packages.
"I am truly appalled. The post below was voted down, and was the first one to actually make any sense:"
Except it is essentially debunked neocon spin that tells only a portion of the story to prop up a shaky premise.
We exited WW2 as the only industrial nation that wasn't bombed into rubble. IE: we exited a depression with a strong industrial base while the rest of the planet was a smoldering ruin. The spending during WW2 was just more govt spending on a grander scale, coupled with an envious position on the exit of the conflict. The the results are the same: the government spent their way out of the depression and WW2 just accelerated that spending. Oh noes! WW2 was socialism!
But we know the R solution: deregulate everything, create securitised derivatives and default swaps that give lenders a false sense of security so they dole out money to those who cannot afford it! Yeah! That worked GREAT! Then, we'll give tax breaks to people like me, who don't really need it on the theory that I'll hire peole for jobs. Fuck that, I spend my tax refunds at newgg. So much for that plan.
"give lenders a false sense of security so they dole out money to those who cannot afford it! Yeah! That worked GREAT!"
That was accomplished by the Community Reinvestment Act, under Jimmy Carter, to further another failed relec of the New Deal - Freddie Mac and Fanny Mae.
"Then, we'll give tax breaks to people like me, who don't really need it on the theory that I'll hire peole for jobs. Fuck that, I spend my tax refunds at newgg. So much for that plan."
You may not need it, but many others do. And the fact that you would spend that money at Newgg demonstrates that a reduction in taxes would stimulate the economy.
The sadest thing I have ever read in my life. 4.17 BILLION dollars in profits...did everyone get that?...4.17 BILLION...PROFITS. Are the guys running these businesses higher than a kite?? When is profits in the billions a reason to lay people off. How about you through a couple of million off to the side to cover them until your "real" profits return. This is the problem with corporate america. It is the slash mentality that gets EVERYONE into trouble. 4.17 BILLION in PROFITS. Come on!
Yet MS continues to produce and sell their biggest "me too" product to date despite abysmal sales. A smart company would jettison this failed product in an attempt to corner another market. I expect MS to continue to pour and lose untold millions for this crappy device.
"Zune platform revenue decreased $100 million or 54% reflecting a decrease in device sales."
Jubei, when are you going to stop being such a tool?
I have friends that lost their jobs today because of this mess. This is a greater problem facing our entire country. There aren't many absoutes in the universe, but I can safely guarantee that it is not funny in the least bit. Nor should it be an opportunity for snide remarks towards people in distress.
I've read through all of the comments here and WOW! WOW to the astonishing amount of complete and utter waste of air that so many grey matter-less inconsiderate pieces du merde that are allowed access to the internet that somehow believe they possess "wit" or "cleverness". I would sincerely wish that all of you, like the grinch, have an unexpected episode where your heart grows a few sizes.
What a fantastic bunch of ideas to save Microsoft everyone seems to have. If only you were all running the company or our economy none of this would have ever happend with these spectaclarly inciteful ideas. If only...
If these are the people that designed Vista, GOOD RIDDANCE.
Just get rid of Balmer rather then the 5000 people. That guy ranks as one of the worst CEO's ever!
Doug said,
"The sadest thing I have ever read in my life. 4.17 BILLION dollars in profits...did everyone get that?...4.17 BILLION...PROFITS. Are the guys running these businesses higher than a kite?? When is profits in the billions a reason to lay people off. How about you through a couple of million off to the side to cover them until your "real" profits return. This is the problem with corporate america. It is the slash mentality that gets EVERYONE into trouble. 4.17 BILLION in PROFITS. Come on!"
If anybody has a retirement plan, 401k plan, or IRA, chances are you have Microsoft as one of the investment vehicles. So YOU'RE the one responsible for the layoffs at Microsoft because YOU want your retirement plan to grow! YOU'RE the greedy ones!