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Microsoft To Cut 5,000 Jobs
- Thread starter thecritix
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And this is announced exactly the day after they visit my academic department, give us a presentation about themselves and encourage us all to apply for employment with them, and serve us all pizza... 
And this is announced exactly the day after they visit my academic department, give us a presentation about themselves and encourage us all to apply for employment with them, and serve us all pizza...
Just because they're cutting jobs doesn't mean they're not hiring...
Certainly it's an old trick. Fire 1,000 40 to 50 year old engineers and replace them then kids who make less then 1/2 as much money.
The dirty little secret at Microsoft is that they've been laying off workers for years. The layoffs don't get recorded as such because they hire a great many contract employees whom they can terminate without calling it a layoff.
But this is news because it's the first time they've announced a company-wide layoff, which is indicative of the slowdown in their core business, due in no small part to Apple's incursions.
But this is news because it's the first time they've announced a company-wide layoff, which is indicative of the slowdown in their core business, due in no small part to Apple's incursions.
In case anyone is interested, here's the memo Steve Ballmer sent out to all Microsoft employees this morning:
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
Allow me to add I'm not a Microsoft employee. I found the text of this memo online.
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
Allow me to add I'm not a Microsoft employee. I found the text of this memo online.
Well that's certainly reassuring.
Good thing I wasn't sipping my tea when I read the part about Microsoft's agility and efficiency. I didn't need to irrigate my nostrils today.
I guess it will never make sense to me the philosophy of "hey, we are doing great and are profitable, but now we are going to layoff some folks to help our bottom line". And that's what it seems like this memo said. They announce $16.6 billion in revenue a 2% increase than last year but we are going to fire some of you because that's not a good enough number.
This ranks right up there with TV companies canceling very popular shows because the economy is bad. Shows that bring viewership and revenue in, or like a story that was on 20/20 last week of a Denver news anchor who was with the company for 26 years, the most popular news anchor they had and then were bought out and the guy was canned.
Just doesn't make sense to me. The philosophy of firing the best most qualified people because they make the most money but keep the useless fat boggles my mind.
This ranks right up there with TV companies canceling very popular shows because the economy is bad. Shows that bring viewership and revenue in, or like a story that was on 20/20 last week of a Denver news anchor who was with the company for 26 years, the most popular news anchor they had and then were bought out and the guy was canned.
Just doesn't make sense to me. The philosophy of firing the best most qualified people because they make the most money but keep the useless fat boggles my mind.
Well that is why MS produces third rate product knockoffs.
MS products are selling because people think if it's complicated and have a long feature list, it must be worth it. Even if it takes them months (or never) to get used to the idiosyncrasies. Also, if those people have no experience with anything better (due to lack of ability to process new information), what else can they buy?
Is that supposed to be a question or an answer?
Mac market share has roughly doubled over the last couple of years, and the growth in the shipments of Macs has far outstripped the rest of the PC industry. Out of who's hide has that growth come, if not Microsoft's?
LOL....
This is sooooooooooo like Ballmer....
Thank God I don't work for Microsoft...
Feel sorry for the people that do - thinking they work at such a great place, then they pull something like this...
(I still hope and pray that my company doesn't turn out like this - you never know.
)
Holy crap. That memo reads like one giant "F U" to his employees. He talks like he's trimming excess fabric off a shirt or something.
Companies lay people off all the time. It just becomes a big story in these times. As others have stated, Intel is laying off 5,000 workers, and Intel supplies Apple with all its CPUs. Does that mean Intel is doing a bad job?
Anyways, the core business of Microsoft is the enterprise world. If the enterprise world is doing bad (hint: it is), then MS will get hit hard as well. Its the same reason Intel isn't doing so hot either - the PC industry as a whole is down on the year.
Anyways, the core business of Microsoft is the enterprise world. If the enterprise world is doing bad (hint: it is), then MS will get hit hard as well. Its the same reason Intel isn't doing so hot either - the PC industry as a whole is down on the year.
Companies lay people off all the time. It just becomes a big story in these times. As others have stated, Intel is laying off 5,000 workers, and Intel supplies Apple with all its CPUs. Does that mean Intel is doing a bad job?
Anyways, the core business of Microsoft is the enterprise world. If the enterprise world is doing bad (hint: it is), then MS will get hit hard as well. Its the same reason Intel isn't doing so hot either - the PC industry as a whole is down on the year.
I would agree with you if M$ was losing money, but to put in the memo that they are up 2% in Q2 than they were last year in Q2 and then say that we are laying off. It's a bit hard to stomach for those who are getting fired.
It's definitely painful - the company I work for laid off a bunch of people despite posting major profits and a strong quarter recently.
But the fact is, (good) companies forecast for the next few quarters, and a lot of them are seeing things are going to get worse before they get better. For example, Intel had already laid off a lot of people in the last few years which probably saved them a lot more pain recently (and cut out a lot of fat too, which has given them a big boost in the Core 2 and i7 series)
Companies lay people off all the time. It just becomes a big story in these times. As others have stated, Intel is laying off 5,000 workers, and Intel supplies Apple with all its CPUs. Does that mean Intel is doing a bad job?
Anyways, the core business of Microsoft is the enterprise world. If the enterprise world is doing bad (hint: it is), then MS will get hit hard as well. Its the same reason Intel isn't doing so hot either - the PC industry as a whole is down on the year.
The story here is that Microsoft has never done a company-wide layoff before, and they've been through any number of recessions. Maybe I'm the only one who can remember when the company's image was Microsoft the Invincible, the one that grew no matter what. I hope not.
Well I guess they can save up enough money to do another failed ad campaign by laying off those people.
5000 employees at say average $150,000 cost (salary + benefits) = $750 million dollars...
The Microsoft Invincibility Myth
http://www.roughlydrafted.com/RD/Home/C91CCB7E-A668-4B0A-ABB6-98840AC8A317.html
Well they did still grow this quarter, but I don't think they've been in any recession quite like this one so I don't know if previous history can go
There were financial companies that have existed 100 years that seemed invulnerable at this point a year ago, that are completely gone now