In an unprecedented but expected move, Microsoft
announced today that it could lay off up to 5,000 people and reduce headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing.
The company reported revenue of $16.63 billion for the
second quarter ended Dec. 31, 2008, a 2% increase over
the same period of the prior year. Operating income, net
income and diluted earnings per share for the quarter
were $5.94 billion, $4.17 billion and $0.47, declines of
8%, 11% and 6%, respectively, compared with the prior
year.
"While we are not immune to the effects of the economy,
I am confident in the strength of our product portfolio
and soundness of our approach," said Steve Ballmer,
chief executive officer at Microsoft. "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."
As part of this plan, Microsoft will eliminate jobs in
R&D, marketing, sales, finance, legal, HR, and IT over
the next 18 months, including 1,400 jobs today. These
cuts, according to the company, will reduce the
company?s annual operating expense run rate by
approximately $1.5 billion and reduce fiscal year 2009
capital expenditures by $700 million
Client revenue declined 8% as a result of PC market
weakness and a continued shift to lower priced netbooks.
However, strong annuity licensing drove Server & Tools
revenue growth of 15%. Entertainment and Devices revenue
grew 3% driven by strong holiday demand for Xbox 360
consoles with a record 6 million units sold in the
quarter.
During the quarter, Microsoft showcased significant new
product innovations by debuting Windows 7, Windows
Azure, Office Web applications, Windows Server 2008 R2
and Office Communications Server 2007 R2. Microsoft also
announced general availability of Silverlight 2,
Exchange Online, SharePoint Online, Windows Small
Business Server 2008, Windows Essential Business Server
2008 and a new release of Microsoft Dynamics NAV.