Redmond, Washington — Facing the pressure from declining economy and reduced demand for its popular Windows and new competition from several quarters, Microsoft has begun its second phase of layoffs. The software major on Tuesday issued pink slips to more than 3,000 employees from its U.S. and worldwide locations as part of a previously announced cost-cutting initiative.
“This is difficult news to share,” Microsoft CEO Steve Ballmer said in an e-mail to employees. “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.”
The software maker in January said that planned to cut up to 5,000 jobs over the next 18 months. It made 1,400 cuts at the time. With the second wave of notifications, Ballmer said Tuesday’s action means the company has “almost” reached that objective.
However, at present it did not announce any further cuts, but hinted that Microsoft could layoff more than the originally announced 5,000 jobs if economic conditions deteriorate or fail to improve.
“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,” Ballmer wrote.
While most of the original dismissals in January were in the US, the latest round was split evenly between the US and the company’s international branches. Microsoft said it plans to create between 2,000 and 3,000 jobs between now and the middle of next year, many of which could be filled by the laid off workers.
“As part of the plan we announced in January to reduce costs and increase efficiencies, today we are eliminating additional positions across several areas of the company,” Microsoft said in a public statement confirming the cuts.
Faced with a declining economy, new areas of competition, and a staple product that turned out to be a dud, Microsoft last month reported one of the worst financial quarters in its history.
The company said total revenue for its third fiscal quarter fell 6% year over year, to $13.6 billion, while net income, including $710 million in restructuring and investment charges, dropped 32% to $3 billion. Earnings per share came in at 33 cents, compared with 47 cents in the year prior.
The job eliminations were the first broad-sweeping series of cuts the company has ever had to make and are said to represent some five per cent of Microsoft’s total workforce.
In a corporate email letter leaked to the press, chief executive Steve Ballmer did not rule out the possibility of more layoffs should the company’s fortunes not improve.
“We are moving quickly to reach this target in response to consistent feedback from our people and business groups that it is important to make decisions and reduce uncertainty for employees as quickly as possible,” said Ballmer.