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Microsoft expected to reveal profit loss, job cuts

Analysts believe 'thousands of jobs will be cut'

Microsoft is expected to reveal that it failed to hit its profit targets for the final quarter of 2008, which will results in thousands of job losses, say analysts.

Jefferies & Co analyst Katherine Egbert told Reuters: "All eyes are on the forecast. Expectations for the guidance are pretty low."

Analysts are currently predicting Microsoft's profit will be $0.49 per share, which is below the $0.51 to $0.53 Microsoft had forecast. The company's quarterly revenue is also expected to be down, with Wall Street predicting $17.1bn compared to the $17.3 to $17.8bn Microsoft initially predicted.

Egbert says Microsoft will report sales of Windows have dropped by 3 percent compared to the previous year.

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Reuters Estimates has revealed it expects Microsoft's yearly income to be $17.7bn - that's 10 percent less than forecast while revenue will be down 4.4 percent on the estimated figures to $63.68bn.

Microsoft is also expected to announce job cuts. Rumours have been circulating that Microsoft will start laying off staff for a number of weeks. "Checks indicate that Microsoft is likely to engage in headcount reductions to the tune of 6,000 to 8,000 employees or 6 to 8 percent of its 95,000 workforce," McAdams Wright Ragen analyst Sid Parakh told Reuters.

"Our checks also revealed some speculation over the potential for a second round of cuts in some groups sometime later in the year."

However, some analysts believe Microsoft will opt to reduce costs rather than lay-off employees.

See also: Microsoft & CNN capture Obama inauguration in 3D

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