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Bad Day In Redmond: Microsoft To Lay Off 1,200 Workers

sjohnson
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Posted May 6, 2009 - By Stephen Johnson

MicrosoftTechnology giant Microsoft announced plans to lay off 1,200 workers yesterday.  According to an email sent from the company's president, Steve Ballmer, the job cuts were part of the plan announced in January to reduce costs and increase efficiencies,

"While job eliminations are always difficult, we are taking these necessary actions in response to the global economic downturn," Ballmer said in a statement.

These job-cuts represent nearly the last of the 5,000 positions Microsoft said it was eliminating in January. The cuts were made across the board and did not focus in "one particular place and not others," according to Microsoft spokesman Lou Gellos. According to sources quoted by The Seattle Times, departments affected appear to include the IT department at Microsoft, the sales, marketing and service group, and MSN.com, Microsoft's online content site.

Massive, Microsoft's in-game advertising firm, was reportedly hit particularly hard by the layoffs, suffering near 75 percent staff reduction. That probably means around 100 people will lose their employment when the layoffs go into effect. Why cut Massive? Falling online ad rates. Electronic ads are company's raison d'être, and exactly the kind of expense firms slash in times of hardship.

The notification to employees was given pursuant to Federal law. Layoffs will take effect officially no earlier than July 4. While some employees may have been told their last day was this week, they will be paid through Independence Day.

As for what the timing of the firings means for Microsoft, it depends on who you listen to. According to president Ballmer, Microsoft's original plan of laying people off over 18 months was hurting morale, so the company chose a swift stroke as opposed to death by 1,200 cuts. "We are moving quickly to reach this target in response to consistent feedback from our people and business groups that it's important," Ballmer wrote.

Analyst Matt Rosoff sees something different in the timing. "The fact that they seemed to accelerate it so cuts would all fall in [fiscal year] 2009 suggests the economy is not doing as well as Microsoft hoped it would, and sales were not doing as well as they hoped it would," Rosoff said.

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Bad Day In Redmond: Microsoft To Lay Off 1,200 Workers
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