Microsoft lays off 3,000, says more cuts possible

Sales of multiyear corporate licenses could be the key factor in a decision to make further cutbacks

Microsoft laid off 3,000 workers last week in the second wave of a major reduction announced in January. And in a memo to employees, CEO Steve Ballmer said more cuts are possible.

"As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure, including additional job eliminations," Ballmer wrote.

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In January, Microsoft had disclosed plans to eliminate 5,000 positions, more than 5 percent of the 96,000 full-time workers it employed at the time. About 1,400 people were laid off then.

In an April 23 10-Q filing with the U.S. Securities and Exchange Commission, Microsoft said it set aside $237 million for severance payments to 3,400 laid-off employees, "all of whom are expected to leave the Company by June 30, 2010."

The filing also said that the company plans to hire 2,000 to 3,000 people over the next 18 months.

Matt Rosoff, an analyst at Directions on Microsoft, said sales of multiyear corporate licenses could be the key factor in a decision to make further cutbacks. "The company is laser-focused on cost containment for FY 2010, so if revenues are down, they'll be looking to make cuts somewhere, and head count is the largest expense," he added.

Dan Olds, an analyst at Gabriel Consulting Group, said the unusual layoff at Microsoft could be "a signal of how the economic crisis has impacted the tech industry," since Microsoft has in the past grown "bigger and more powerful" during lean economic times.

However, over the long term, these layoffs "might actually be a good thing for Microsoft," Olds said. "Over time, even the most successful and efficient company builds up a fat layer."

This story, "Microsoft lays off 3,000, says more cuts possible" was originally published by Computerworld .

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