Network now...NEWS
Microsoft Slashing 5,000 Jobs
Microsoft confirmed Thursday that it would be cutting 5,000 jobs over the next 18 months, with 1,400 to be eliminated immediately.
Cuts will be made across an array of departments including R&D, marketing, sales, finance, legal, HR and IT.
The cost-saving measures will reduce Microsoft's annual operating expense run rate by about $1.5 billion, and reduce fiscal year 2009 capital expenditures by $700 million, the company said.
Microsoft currently employs over 94K workers worldwide.
Earnings
Year-on-year, operating income for the second fiscal quarter ended in December was down 8 percent to $5.94 billion; net income was down 11 percent to $4.17 billion; and earnings per share were down 6 percent to 47 cents.
Overall revenues were up 2 percent to $16.63 billion, driven by increased SQL Server and Windows Server revenues, as well as Xbox revenues.
Xbox
The Entertainment and Devices Division, which houses the Xbox business, reported revenues of $3.18 billion, an increase of 3 percent year-on-year.
But operating income for the quarter took a 60 percent dive to $151 million, "primarily due to increased cost of revenue, research and development expenses, and sales and marketing expenses," the company said.
Xbox 360 and PC game revenue increased $135 million, or 6 percent, primarily driven by Xbox 360 software and hardware. The gains were partially offset by a September hardware price cut.
Microsoft shipped 6 million Xbox 360s during the quarter, versus 4.3 million shipped during the comparable quarter a year prior. The firm said during the first six months of the fiscal year it shipped 8.3 million Xbox 360s compared to 6.1 million a year ago.
Revenue decreased for the Zune media player, which is also housed in the EDD, by $100 million, or 54 percent as sales of the device slowed.
CEO Steve Ballmer commented, “While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach.
“We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today.”
Microsoft shares were down over 10 percent to $17.38 in afternoon trading.
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It's funny that Kim was all over that Sony job loss page but has nothing to say about this one.
Seems a bit rough to be cutting all those jobs while still posting a 5.9 billion income, if anything's going to give the recession more steam it's this type of speculative job cutting.
Has Microsoft made any Xbox 360 forecasts for the entire fiscal year? I know that Nintendo and Sony have, but I haven't seen anything from Microsoft.
Its alarming so many large companies are having financial issues: Microsoft, EA, Sony, Intel and AMD... I wonder what the long term effects of this will be.
Yeah, Sega also announced layoffs today. I think the long (and not so long) term effects are we're going to see fewer game releases and more game delays. At least we had two incredible, consecutive years of game releases to enjoy. Looks like things are going to be a bit gloomier for a while now.
I guess some of you missed the part where the gaming division is still making a profit (albeit, far less of a profit)? Corporate wide the losses are primarily due to declining PC sales, better market penetration from Apple and netbook laptops. Zune is also a drag specifically on the gaming division (it's lumped in with the 360's division).
One interesting side note is the part stating some of the reduced profit was from "R&D". Obviously everyone knows they're working on the next x-box, and an argument could be made that the R&D is towards future hardware savings on the existing 360, but it's not a stretch to assume that if MS is launching another xbox in 2011 they would start seeing the cyclical R&D hit starting in 08.
EDIT: I worded a portion of that very poorly. "corporate wide the losses" meant losses in relation to last year. MS did not actually realize a loss corporate wide (they made over $4 Billion).
go go recession fun!
is nintendo the only one who isn't affected?
Sony cuts this morning, Microsoft cuts this afternoon.......I expect to see an article about Nintendo job cuts in about............5 hours? And........go!
Nintendo, unlike the others makes a profit on each piece of hardware as well as software that they sell. I suspect Nintendo won't lay off anyone and in fact may use that point to rub it in the other's faces at how well they're doing.
I agree Nintendo is probably earning far more then the other 2. But these are some monumental cuts these 2 companies are making. Surely Nintendo is also feeling at least SOME pinch and should be making some smaller-scale cuts? Not that i'm HOPING they do or anything, as I don't want to see anyone losing their job unncessairly. But I find it hard to believe that Sony and Microsoft can be making these sizable cuts while Nintendo just keeps on keeping on?
Keep in mind Sony and MS are diverse companies which deal in a variety of other products besides video games. There are no specifics as far as how many jobs got cut from MS and Sony's games related divisions (except for MS stating the amount that the operating income for the Entertainment Devices division would be reduced by, but that reduction is probably more than just salaries).
If there are any Nintendo job cuts, it'll be so few because: 1) of their relative company size compared to MS and Sony and 2) the success they've had the last 3 years. I think the recession casualties in the video game industry, sadly will be the more independent and smaller developers and publishers, who have to rely on venture capitalists/investors funding the early development of projects, since there's a lot less money invested in anything that carries even the slightest amount of risk.
Maybe if Microsoft didn't release such a gimped console, then they could've saved some jobs with that $1 billion+ they've spent on getting the 360 "right".
If they haven't released a "gimped" console they wouldn't have that one year advantage to Sony and they would be a more close race between the two and in the end the profits wouldn't have been that good and MS will be cutting jobs just like Sony or worse.
How would tighter competition be bad? Or MS actually acting responsibly and releasing a well-made product?
MS's gaming division takes a hit. Can't say i'm surprised.
//runs before Kim_Naroz & jb1 get here.
Microsoft as a whole is not in as much of distress as Sony Corp. Sony is actually going to post a loss while Microsoft has had profit but just didn't meet goals.