Microsoft has announced that it will cut as many as 5,000 jobs, roughly 5% of its total workforce:
Jan. 22 (Bloomberg) — Microsoft Corp. will cut as many as 5,000 jobs, its first companywide firings, and said sales and profit will probably drop as the global recession eats into demand for software. The stock fell the most in three months.
The reductions, about 5 percent of its workforce, will take place in nearly all areas and will help save $1.5 billion, Microsoft said today in a statement. The company will also eliminate merit-based pay raises, cut travel costs and reduce the use of contractors to shore up profits.
Chief Executive Officer Steve Ballmer is under pressure to reduce costs as sales growth dries up in what may be the worst recession since World War II. The company’s Windows division, which accounts for about a quarter of sales, is suffering after personal-computer shipments rose at the slowest rate in six years in the fourth quarter.
No doubt all of these people will be getting jobs building roads and bridges. I fear for our roads and bridges.
In all seriousness, I repeat what I’ve been saying around here for some time. I think it’s one thing for a company to cut jobs in order to survive but another thing entirely to cut jobs in the worst economic climate in decades to keep its stock valuation high or boost the dividend.
Has a company ever cost-reduced its way to robust growth? I can’t think of a single case where that’s happened. Particularly in a company where productivity and creativity go hand in hand mood is extremely important. When Teletype cut staff back in the 1970’s, it had a drastic negative impact on productivity. That can especially be the case when management doesn’t have the cuts to pick who will go and who will stay.
Welcome, The Moderate Voice readers! See today’s post on the Caterpillar layoffs for the latest healthy company laying people off.