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Microsoft Eliminates 800 Positions

Microsoft cut 800 positions worldwide on Wednesday.

A report by TechFlash's Todd Bishop reported the cuts as a rumor on Tuesday, but they were confirmed today by Microsoft spokesperson Lou Gellos.

"Earlier this year, we announced that in order to reduce costs, increase efficiency and prioritize our focus areas, we would eliminate approximately 5,000 positions by June 2010," Gellos explained in a prepared statement. "Today, we are eliminating around 800 positions spread across multiple businesses and locations and have completed our reduction plan sooner than we had anticipated 11 months ago. At the same time, we continue to hire in priority areas, but also understand that continuing to manage our businesses closely, as we always do, can mean additional headcount adjustments."

The "reduction plan," announced in January, was a historic cut in 5,000 positions at Microsoft, originally scheduled to take place over 18 months. However, Microsoft explained in its fiscal first-quarter 10-Q report that this reduction plan has been completed. The company eliminated 5,000 positions, amounting to about 4,600 personnel, according to that report.

The new cut of 800 positions goes beyond Microsoft's 5,000-position cut to some degree, Gellos confirmed, as reported in a second TechFlash story.

Microsoft provided no explanation for why the cuts took place. It also didn't indicate how its divisions were affected.

Possibly, Microsoft's recent financial reporting may have triggered the layoffs. Microsoft's 1Q 2009 financial report showed declining or flat revenues for most of its business segments. However, those results still outperformed financial analyst expectations for the company in this current economic downturn.

In explaining the 1Q report, Chris Liddell, Microsoft's chief financial officer, said that Microsoft's performance had a lot to do with holding down its costs, including lowering the Microsoft employee headcount by 4 percent, year over year. Windows 7 preorders had a "modest" effect on Microsoft's 1Q financials, Liddell said. He expected to see businesses starting to buy new PCs some time next year.

Microsoft "directly employed 93,000 full-time staff" in 2009, with 56,000 of that number employed in the United States, according to stats posted on a Microsoft Web page. The company is described as a bellwether for job growth in the overall IT business segment, according to an IDC report.

About the Author

Kurt Mackie is senior news producer for the 1105 Enterprise Computing Group.

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