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Microsoft misses Wall Street estimates, cuts 5000 jobs

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Microsoft misses Wall Street estimates, cuts 5000 jobs

Redmond (WA) – Today, Microsoft reported fiscal earnings for the quarter ending December 31, 2008. Revenue was $16.63 billion, up 2% over last year. Operating income was $5.94 billion, down 8% over last year. Net income was $4.17 billion, which is down 11% over last year. These numbers fell below the analysts-expected revenue of $17.1 billion.

Steve Ballmer said in the press release, “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. 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.”

Microsoft also issued this warning:

“In light of the further deterioration of global economic conditions, Microsoft announced additional steps to manage costs, including the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing. As part of this plan, Microsoft will eliminate up to 5,000 jobs in R&D, marketing, sales, finance, legal, HR, and IT over the next 18 months, including 1,400 jobs today. These initiatives 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.”

According to a report on Reuters, Microsoft will also be cutting travel spending by 20%, eliminating “merit salary increases” in September, 2009, and will significantly reduce spending on vendors and contingent staff. Microsoft’s (MSFT) shares fell to $17.84 in early trading, down from a $19.38 close the day before. At the time of this writing they were at $17.76.

Microsoft’s planned 5,000 job cuts in R&D, marketing, sales, finance, legal, HR and IT will occur through the middle of 2010. Only 1,400 jobs are affected today.

Microsoft wrote in their press release, “Due to the volatility of market conditions going forward, Microsoft is no longer able to offer quantitative revenue and EPS guidance for the balance of this fiscal year. Microsoft offers operating expense guidance of approximately $27.4 billion for the full year ending June 30, 2009.”

Details of the earnings announcement will be broadcast via webcast today at 11am EST, and will be available online via archive through January 22, 2010.

See Microsoft’s press release.