Microsoft (MSFT) is preparing to whack 15,000 people in two weeks, says Fudzilla, 17% of its global work force. A cut of this magnitude seems highly unlikely, although the targeted areas do make sense.
Unless Microsoft’s business has been absolutely crushed in the past two months, there is no reason for the company to suddenly cut this much cost. Microsoft’s margins are still fine, and much of its revenue is generated from multi-year contracts (and is therefore unlikely to see a massive intra-quarter hit).
The only way we could see Microsoft laying off this many people is if the company decided to eliminate business units. And if Microsoft did decide to restructure its business, it would likely sell rather than shut down divisions, including MSN (If Microsoft wants to get out of the consumer Internet business, which it should, the best way to do it is to spin its online operations into Yahoo in exchange for a big piece of the company.) Microsoft just hired a new head of MSN, and it is certainly possible that he will make some cuts. But 15,000 sounds extreme.
Could Microsoft trim some fat in two weeks? Absolutely. But a 17% cut is more than fat.
Fudzilla (via ArsTechnica): The rumour that Microsoft was set to lay off people on January 15th, 2009 is no longer a rumour but a fact. Staff at Microsoft have been informed that the company is readying major layoffs to its worldwide operations and it’s not a small cut, either.
Currently Microsoft employs about 90,000 people across the world and from what we’re hearing, some 15,000 of those are expected to be giving marching orders come January 15th. That’s almost 17 per cent of Microsoft’s total work force, not exactly a small number.
So far, we haven’t managed to confirm what departments or regions will be hit the worst, but we’re hearing that MSN might be carrying the brunt of the layoffs. We’re also hearing rumours about the possibility of somewhat larger staff cuts at Microsoft EMEA (Europe, Middle East and Africa).
It’s unlikely that Microsoft will be laying off a lot of people in departments and regions that are doing well, and considering the recent upturn in console sales, we have a feeling that at least most of the people working in the Xbox 360 departments will be pretty safe. Keep reading >
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