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Microsoft could axe jobs next week

Hundreds of staff could go

Microsoft could make hundreds of staff redundant next week, after it reports its earnings on January 22, says the Wall Street Journal.

Rumours of Microsoft job cuts have been circulating since mid-December. However, the newspaper said analysts are expecting revenue growth of about 5 percent. That percentage tracks on the low end of guidance Microsoft issued in October for 2009 revenue growth, which it predicted will be in the "single digits to low double digits". Microsoft's financial year ends June 30, 2009.

It is likely that Microsoft would make any layoff announcement during or before the earnings call so financial analysts can adjust their forecasts.

Chris Liddell, Microsoft's chief financial officer, said during the October earnings report the company was adjusting downward its guidance for the second fiscal quarter of 2009.

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But he qualified his statement, saying strong cash flow, high unearned revenue and plentiful cash on hand would "allow us to weather any economic recession in relatively better terms than most".

In October, Microsoft reported it had $23.6bn (£15.8bn) in cash and short-term investments. The company also showed $4.2bn (£2.8bn) in unearned revenue for its fiscal 2009 first quarter, mostly gained as a portion of three-year support and maintenance contracts with corporate customers.

Expectations are that if Microsoft does lay off staff, the cuts will be far less than the 15,000 number that has been floated by some news outlets. With 94,286 employees worldwide, a cut that size would represent nearly 16 percent of Microsoft's workforce. Since its inception in 1975, Microsoft has not had a single layoff even close to that number.

It is thought, Microsoft has been thinning the ranks of contract employees and nipping and tucking in various budget areas, including new hires, just like many other companies in the tight economy.

Microsoft officials continue to have no comment on the layoff rumors, which have been swirling as far back as mid-December. At that time, Brad Reback, an analyst with Oppenheimer & Co, said in a report that Microsoft layoffs would be "well-received" by Wall Street. He also said it would show that profit is more important than growing revenue, a well-known trait Microsoft has developed.

See also: Microsoft updates Malicious Software tool


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