Microsoft exceeds goal of 5,000 layoffs

Microsoft's head count reduction since January 2009 now stands at 5,300

Microsoft has more than made good on its plan from a year ago to eliminate 5,000 positions by the middle of June 2010, the company reported as part of its quarterly 10Q filing with the Securities and Exchange Commission.

Microsoft reported that its head count reduction since January 2009 now stands at 5,300. The original plan for mass layoffs, the first in the company's history, was put forth in January 2009 by CEO Steve Ballmer.

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Layoffs: Microsoft bent, but not broken

The staff reductions include 800 positions that were eliminated in Microsoft's fiscal second quarter that ended Dec. 31, 2009, according the 10Q filing. The company reported that it paid out $59 million in severance associated with those layoffs.

While not part of the position cutdown, among those leaving in the second quarter was Chris Liddell, who resigned as CFO. His departure is of note because the 10Q filing includes a copy of his lengthy resignation agreement, which promises to pay him nearly $2 million by the end of March.

Liddell received a payment of $950,000 on Dec. 31 and will get another $950,000 on March 31. Terms of the deal include provisions barring him from talking to the media or blogging without the approval of Lisa Brummel, the head of Microsoft's human resources department. He also agreed that he could never again be employed by Microsoft.

The staff reductions began in January 2009 when Microsoft cut 1,400 employees in a move that shocked many inside the company even though rumors had been flying for months. It was the first time in its history that Microsoft had made wholesale cuts across the company.

At the time, Ballmer said staff cuts would continue over an 18-month period ending on June 30, 2010, and could go as high as 5,000. With five months left until that deadline, Microsoft has exceeded Ballmer's prediction by 300.

The results of those layoffs can be seen throughout the company's 10Q filing as many divisions reported that earnings were helped by decreased head count-related expenses. For example, Microsoft's Business Division reported that "sales and marketing expenses decreased $262 million or 12%, primarily driven by a decrease in corporate marketing activities and headcount-related costs associated with our corporate sales force."

The layoff numbers come as Microsoft reported a record quarter of revenue totaling $19 billion.

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This story, "Microsoft exceeds goal of 5,000 layoffs" was originally published by Network World.

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