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Brier Dudley's blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

November 4, 2009 at 10:01 AM

Microsoft cuts 800 more jobs, including 200 in Puget Sound

Microsoft exceeded the forecast it gave Wall Street – for layoffs.

The company announced today that it cust an additional 800 jobs as part of broad cutbacks announced in January. The initial target was to cut 5,000 jobs but with the round announced today, the total is 5,800, spokesman Lou Gellos said.

“This does complete that program,” he said.

But Gellos didn’t rule out additional cuts ahead as the company continually adjusts its business.

“If that means we focus on different businesses or take care of employee headcount issues, we would do that,” he said.

It’s a new tone for a company that historically was loathe to ever use the word layoff, but new executives and economic conditions have made efficiencies and cost-cutting a more public mantra at the world’s largest software company.

Employees had heard rumors of cuts coming this week and the axe finally fell.

Gellos wouldn’t say which areas are being cut or whether they correlate to Microsoft’s recent decisions to terminate businesses such as the MSN Direct information service. The company also recently finished new versions of its biggest products – Windows 7 and a new version of Office that’s in testing.

Nor could Gellos say exactly how the cuts have affected headcount, because the company has continued to hire “in certain focus areas.” Some people whose jobs were cut found work in those focus areas, he said.

The company employed 91,005 globally and 40,244 in the Puget Sound region at the end of September, the most recent count available.

Today’s move largely ends the first major layoffs in Microsoft’s history. The cuts came in three waves, beginning in January and then another round in May, when Chief Executive Steve Ballmer reiterated the reasons in a memo to employees. An excerpt:

In January, in response to the global economic downturn, I announced our plan to adjust the company’s cost structure through spending reductions and job eliminations. Today, we are implementing the second phase of this plan.

This is difficult news to share. Because our success at Microsoft has always been the direct result of the talent, hard work, and commitment of our people, eliminating positions is hard.

Today’s action includes positions in the United States and in a number of countries around the world. In the U.S., affected employees will be notified directly by their managers today. In other countries, local leadership teams will provide more specific information about the impact to their organizations.

With this announcement, we are mostly but not all done with the planned 5,000 job eliminations by June 2010. We are moving quickly to reach this target in response to consistent feedback from our people and business groups that it’s important to make decisions and reduce uncertainty for employees as quickly as possible, and so that organizations can concentrate their efforts and resources on strategic objectives.

As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure including additional job eliminations.

Gellos said there will be no such memo and no town hall-type meeting today.

Although the cuts are dramatic and ripple throughout the economy of a region shaken by Boeing’s decision to begin building jetliners in South Carolina, Microsoft still hasn’t retreated much from a massive hiring surge that began in 2007.

It hired nearly 13,000 people during its 2007 fiscal year, the biggest gain in a decade of surging employment growth at the company. That growth finally slowed this past year, during its fiscal year that ended June 30.

During that same period, the company in 2003 cut the stock option program that minted Microsoft millionaires and transformed the Seattle area during the 1990s, while ramping up its physical presence with an enormous, $1 billion-plus campus expansion that began in 2006.

Portions of the campus project were suspended when the cutbacks began, but the company continued to spend heavily on datacenters around the world to improve its search business and compete with Google and others developing online software and services.

Here’s the company’s total employment at the end of its last 10 fiscal years, plus net revenue:

June 30, 2009 92,736 $58.44B

June 30, 2008 91,259 $60.42B

June 30, 2007 78,565 $51.12B

June 30, 2006 71,172 $44.28B

June 30, 2005 61,000 $39.79B

June 30, 2004 57,086 $36.84B

June 30, 2003 54,468 $32.19B

June 30, 2002 50,621 $28.37B

June 30, 2001 48,030 $25.30B

June 30, 2000 39,170 $22.96B

June 30, 1999 31,575 $19.75B

Comments | Topics: layoffs, Microsoft

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