I hope they’re expecting business to get much worse

Microsoft axes 5,000 staff as Q2 profit dives 11% • The Register

The software giant, which saw its shares fall 8.5 per cent to $17.88 following the announcement, said it would not be offering profit forecasts for the rest of the fiscal year.

For the second quarter ended 31 December 2008, revenue climbed slightly by two per cent to $16.63bn. Analysts had forecast $17.1bn for Microsoft’s Q2 results.

It pulled in operating income of $5.94bn, down eight per cent on the same period a year earlier. Net income panned out to $4.17bn, delivering earnings per share of $0.47, two cents less than analysts had expected.

Microsoft will axe up to 5,000 staff in its research and development, marketing, sales, finance, legal, human resources and IT units over the next 18 months, including 1,400 employees who were handed their pink slips today. The firm’s current headcount is around 91,000 staff worldwide.

Because when your profits are a mere $4 billion and change on $16 billion plus of revenue, that’s a position pretty much everyone but an oil company would envy. Note, by the way, that the planned cuts will yield well under a billion in savings (and probably a bunch of lost revenue), so their actual impact on profits is questionable.

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