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Microsoft's Workforce May See Pink in Their Future

Pink slips at the world's largest software provider may become a reality soon, according to several reports published this week, citing unnamed sources.

A spokesperson from Microsoft noted in an e-mail today that "Microsoft does not comment on rumors or speculation."

The Wall Street Journal reported on Wednesday that "Microsoft Corp. is seriously exploring significant work force reductions that could be announced as early as next week."

A Seattle Times blog pegged the layoffs for today, a prediction the same blog made back in December, citing an "anonymous unsanctioned company blogger."

Microsoft's CEO Steve Ballmer may have sparked the speculation in cutbacks at a shareholder meeting in November when he alluded to reducing costs in 2009 by "utilizing resources more and reducing the headcount…."

In early January, two blogs -- Fudzilla and Mini-Microsoft -- noted that as many as 15,000 Microsoft employees would be let go, although other Microsoft analysts now predict the actual number will be significantly less.

"As far as reductions in headcount, the most likely scenario is a reorganization that eliminates or consolidates some product groups, eliminating some positions in the process," said Matt Rosoff, lead analyst for Directions on Microsoft in an e-mail today. "It's also possible that Microsoft will continue its longstanding process of getting rid of the bottom performers in any given product group, only this time it might not replace those positions in a lot of product groups, which would lower headcount without actually making it an across-the-board layoff."

Rosoff said he didn't expect anything to be announced today. The bad news more likely would come next Thursday, Jan. 22, when Microsoft is scheduled to announce its quarterly earnings.

Earnings in the fourth quarter are expected to be down, even though the company announced plans last October to cut $400 million to $500 million from its operating budget through reductions in hiring, capital spending and contracted services.

"Generally, companies with Microsoft's current fiscal profile -- rich in cash, highly profitable, and still growing revenue from a $60B+ base -- don't announce across-the-board layoffs," noted Rosoff on the current speculation. "But we live in interesting times."

About the Author

Herb Torrens is an award-winning freelance writer based in Southern California. He managed the MCSP program for a leading computer telephony integrator for more than five years and has worked with numerous solution providers including HP/Compaq, Nortel, and Microsoft in all forms of media.

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