Is Microsoft headed for layoffs?

Forward by Pooja

As the year draws to an end, it seems bellwethers like Microsoft have also fallen prey to the ongoing slump. The internet and blogs
Microsoft
Microsoft in News
have been agog with rumours about Microsoft laying off 10 per cent of its staff and it could be as early as the second week of January. And more often than not, such strong business rumours have their genesis in ground realities within companies.

The chain of rumours may own its genesis to the advice that Microsoft has got from brokerage firm Oppenheimer & Co’s. The company has been advised to cut its workforce by 10 per cent, or about 9,100 employees, to tell the market that profits are more important than revenue growth in difficult times.

The company’s analyst Brad Reback has said in a report on Microsoft that such layoff exercise “would be a healthy move for the company.”

The move would be well received by the market and would “signal that profitability is more important than revenue growth during this very difficult time,” Reback added.

Calling for a 10 per cent reduction on the company’s payrolls, Reback said in his report for the institutional investors of Microsoft that this would result in an approximately 10 per cent gain in its earnings per share.

Reportedly, Microsoft has already started the internal drill of informing employees that the company is readying major layoffs to its worldwide operations and it’s not a small cut either. As per the various blogs, insiders feel that things are looking grim while a few managers have leaked information about substantial workforce reductions on January 15, 2009.
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So effectively, the company seems to be toying with the idea of pruning about 10 per cent of its 90,000 strong workforce to tide over the downturn which, according to net reports, could go up to 15,000 or 17 per cent of the total workforce.

Apparently, MSN might be carrying the brunt of the layoffs and there are rumours about the possibility of somewhat larger staff cuts at
Microsoft
Microsoft in News
Microsoft Europe, Middle East and Africa operations.

The timing of the layoffs is in sync with the company’s Microsoft’s Q2 earnings report which takes place on the 22nd of January 2009.

If the cut comes through, Microsoft will be joining Google and Yahoo in laying off staff to shield the company form the aftermaths of a slump. The Microsoft employees have hit blogs and networking sites big time to share their insecurity.

“I’ve been hearing some stealth layoffs around the SQL and BOSG groups, around 70+ people were given 6 weeks to find another position within the company, otherwise they are laid off,” an anonymous Microsoft worker said in a statement posted on the net.

There is quite a bit of re-engineering underway already. Says another employee: “Our 120+ person organization has just been broken up due to lack of budget. About 1/2 the team is staying, the other half is going to a number of different teams within the larger org. So far, we all appear to have jobs, but man, what a shocker, I thought ours was one of the more stable teams.” I also don’t know if this is the first step towards a layoff, but for now, it seems we’ll have jobs for a few more months.”

According to net reports, one area in general, known as Live Meeting, also seems to have a shake-up going on. An employee who works in the department said it’s a very hostile environment right now.

People are pulled into meetings with management where they get interrogated about what they are working on, people are given impossible tasks like coding things not yet designed, automating things not get coded, documenting unfinished ideas. On top of that they must account for their time by the hour. Live Meeting is in its death throes,” a Live Meeting staffer said.