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Microsoft Slightly Smaller

Microsoft shrunk a tad on Wednesday when 800 pink slips were issued. Lest you think Microsoft is in real trouble, these layoffs are part of the 5,000 jobs the company announced earlier this year would be disappearing. However, it seems that this is, in a way, an additional layoff, and that with these cuts some 5,400 jobs are lost.

I have mixed feelings about all this. The layoffs are not to stem losses, but to protect profits. Microsoft still makes gobs of money. Then again, we live in a capitalist society and Microsoft is a public company beholden to shareholders.

What's your take? Are layoffs in pursuit of profits just part of the American way, or a tawdry way to treat people you thought were smart enough to hire? Answers welcome at dbarney@redmondmag.com.

Posted by Doug Barney on 11/06/2009 at 9:39 AM


Reader Comments:

Mon, Nov 9, 2009 Herb N.

There is nothing wrong with the capitalistic system. The problem is that we have too many wishy washy people that refuse to teach right from wrong. The "everyone wins" philosophy and "let's not hurt their self-esteem" philosophy refuses to judge behavior. Now some of the people who have never learned right from wrong are running some of the companies that people are claiming capitalism has failed. Capitalism has NOT failed, political correctness has failed everyone.

Sun, Nov 8, 2009 RIM

Although the economy is “starting” to recover, we are likely to be in a prolonged period of economic instability. We are not yet “out of the woods.” Need to take action “before” things get too destructive. Need to inoculate against disease “before” you get it. Better to “maintain good health” than try to “recover from poor health.”

Public companies have to act responsibly to sustain profitability. Don’t spend your cash stash just to see how long they can last they way you are. Business strategies constantly need to be realigned as disruptive technologies emerge ( Cloud, etc.). Old competitors die (Sun) and new ones are born (Google). At halftime, teams always rethink their game plan and make adjustments. (also remember, 18 months ago MSFT stock was at 36. Today it is at 28).

Whether someone was “smart enough to hire” is irrelevant. Even if your company is successful “overall”, you assess what parts of your business are not bearing fruit and re-set your game plan. You constantly realign and refocus your technology focus, org structure, type of talent, and financials to ensure future health. Layoffs are a serious thing. Credible companies don’t do it just because “it is part of the American way.”

This forum might actually be ill suited to answer the question posed to it

Fri, Nov 6, 2009 Ken Australia

Oh , please Ballmer laudits Windows 7 sales and at the same time sacks more staff , surely that prompts a few more questions than answers. Also it is universally recognized that the Australian Government has weathered the financial crisis best of all economies. Whilst we are supposed to be a US ally it staggers me how little Americans really know or care for that matter about anyone but themselves. I have watched poor people die in the streets of America , no-one lifted a finger. There are good and bad everywhere - some of your smartest people made big , big , big errors of judgment and are nowhere near as smart as they think they are. I can understand your patriotism but it is not how others perceive things. The world is so much bigger than just the USA now and if you do not see this and cannot become more inclusive I feel it will be more bad medicine for you in the future. Like your views mine are of course just an opinion.You all have the power to change things .. use it wisely. Ken

Fri, Nov 6, 2009 Jim

"Capitalism" does not necessarily mean "excessive greed". We can be a capitalitist society and still not have to lay off thousands of people every time you make a little less. For example, if a company does not make more profits than it did the year before, that's looked at as being bad. But why? Money was still made! Why does it have to be MORE every year? Why not just be content with a profit?? The problem is not capitalism - the problem is greed.

Fri, Nov 6, 2009 Dan Iowa

My last comment on this. (I promise.) Since so many seem to be keying in on American this and American that... anybody stop to check how many of those jobs that were lost were in India or China? Microsoft is a multinational company...

Fri, Nov 6, 2009

It is the new American way, profits at any cost. Regardless of the costs to the public, the employees, or America.

Fri, Nov 6, 2009 Dan Iowa

One other thought... Perhaps some of the 5400 people that lost jobs could start some companies that produce products and services that are not currently produced in the United States. They can then hire the remaining people that were laid off, and then this is all a non-issue. There are plenty of things to gripe about besides Microsoft laying a few people off.

Fri, Nov 6, 2009 BWJ Texas

Oops, posted twice, sorry... I would like to know which economies are doing better than ours overall? Besides China.... They finance the crap out of us here in the US. You folks who are against Capitalism definitely are not in business, nor do you understand it. I am in business for myself adn belong to several groups that do good for the community. I see every day how charitable US business is, along with individual people. Business folks understand that if you want to have a successful business (yes, one that makes profits, but also HIRES folks), you have to invest in your community. And not only do business folks do this because it will help their business, but because they feel they need to give back to the community that supports them - whether that community is a neighborhood, city, state or the country, or even international. The US gives ungodly amounts of money to charity, even in a down economy, all because of evil Capitalism.

Fri, Nov 6, 2009 Dan Iowa

I like the term, "protect profits". It's a vague way of pinning the blame on capitalism or Microsoft. If the layoffs are for an entire project or program, it isn't about bad hiring decisions. It's about end of life of a project or program. Lets look at it another way. If the company has 100 experts on pumping gas, and the company decides it is no longer going to pump gas, but allow customers to do that function, then what do you do with the 100 employees? You can lay them off? Should you be required to always stay in the business of pumping gas because you did at one time? Ultimately this isn't a product of capitalism. It's a product of reallocation of resources. Reallocation of resources would happen no matter what type of society we live in. We might even call it something different, but the outcome is the same. You're not doing the same thing as you were before. You could go look for a job with an organization that still pumps gas, or you can choose to change what you do, so that you can again produce value for the company.

Fri, Nov 6, 2009 BWJ Texas

Let's see.... MS profits have done nothing but continue to climb higher and higher in this economy right...? No, they've fallen like everyone elses. MS needs to keep their company strong and on top, so when the economy does get better it can keep creating more jobs. If it lets itself hemorrhage by keeping people when it doesn't need them, they will end up on a downward spiral and thus will not be able to create as many jobs in the future. This is not unique to MS. Every company does it, and should do it. Those "evil" profits, Doug and Truckstop, will end up invested back in the company and creating more jobs later. And... they'll go to the shareholders so they can buy another cup of Starbucks, keeping employees employed there.... I'd much rather live in a down economy (or a roaring economy) in this Capitalist society than in a more Socialist society. At least everyone has opportunity here even in a down economy. BTW, I thought Truckstop from WI was a trucker, but there's no way that's the case. I've known too many that don't believe at all like that. In fact, a lot of them work for themselves and depend on companies selling products so that they can earn a buck by delivering them. And Doug, when you can run MS better, make sure you let them know so they can make you CEO. Oh well, at least you didn't make any direct political statements this time... ;-)

Fri, Nov 6, 2009

Layoffs are a product of capitalism??? True, I suppose. But Microsoft is also a product of capitalism. In the case of Microsoft, there would be no jobs in the first place if it were not for capitalism.

Fri, Nov 6, 2009

Unfortunately the law of greed has replaced the law of supply and demand. U.S. corporations are so focused on short term gains that they are ignoring long term outcomes. It won't be long before the U.S. is a third rate economy (we are already second rate) as other countries with a long term vision position themselves to displace us from the economic scene. Just look around to see which national economies are still growing in this economic mess (created by the very business still wallowing in greed) and you will see the winners.

Fri, Nov 6, 2009

Layoffs are a product of Capitalism, which works from a structure of we always must make more money first. Our society is based on everyone not having enough and that we must work hard to get more. People are slowly waking up to this myth. Someday society will be based on helping others first.

Fri, Nov 6, 2009 Doug Stein Portland, OR

Innovation requires taking chances. Strategic innovation means making multiple bets on the future. Not all of them pan out. Shutting down an effort is better than providing sinecures. When times are flush (and the company needs to create more and more new product lines) folks can be reassigned. When the product investment needs to be slimmed down (so you don't overinvest) folks need to go. Sometimes the folks were bad hires, but more often they are simply have skill sets that the remaining projects don't need. Note that even when laying off 5600, Microsoft also hired close to 1000. In other words, it's more like rebalancing your financial portfolio. You reallocate your assets to meet the needs of today and tomorrow's market need.

Fri, Nov 6, 2009 truckstop WI

Layoffs in pursuit of profits IS the American way, but it is still callous and immoral as is most capitalist behavior. Capitalism is here to stay. I dare say it is the human condition. It *must* be tempered with the moral fortitude to do what's right for people first, profits second. That would require a paradigm shift away from the "Me First" American capitalist dogma. Good luck.

Fri, Nov 6, 2009 OLAPMonkey

Protect profits for sure! The employees may work for Balmler, but as a shareholder Steve works for me...and I want my profits!

Fri, Nov 6, 2009 Jonathan Byrne

I think layoffs like this are just an easy way to correct hiring mistakes. It could be overstaffing an area or hiring the wrong people.

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