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Thursday, September 02, 2004 - Page updated at 12:00 A.M.
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Microsoft cuts 93 jobs in server division

By Brier Dudley
Seattle Times technology reporter

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In its second major layoff in a month, Microsoft yesterday cut 93 positions in its profitable Windows Server division.

The company cut positions involved in testing and user education, which are among the tasks Microsoft outsources to vendors, including some of India's major software companies. But a spokeswoman yesterday said the jobs are not "being re-created overseas."

Spokeswoman Tami Begasse denied that the cuts were being made because of companywide efforts to cut costs. She said "the evaluation of the division" resulted in organizational changes.

Begasse noted that 44 different jobs are being created in the division, so it will have a net reduction of 49 positions overall. The new jobs will not automatically go to the laid-off workers; they have to reapply for any openings.

On Aug. 19 the company announced the layoff of 76 employees in its Xbox division.

Among the changes made to the server division was a move to automate some testing work that had been done manually.

"To improve quality and achieve predictability in shipping schedules, we need to significantly increase our use of automated testing and move away from the kind of manual testing that we have traditionally done," Senior Vice President Bob Muglia said in an internal e-mail announcing the changes. "This will give us much more control over shipping schedules and will significantly improve quality."

Server sales have been a cornerstone of Microsoft's profit lately. Sales of servers and tools grew 16 percent to $8.5 billion in the fiscal year that ended June 30.

Operating income for the group declined 91 percent for the year, to $96 million, largely because the company's $1.2 billion antitrust settlement with Sun Microsystems was placed on the server division's balance sheet.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com

Copyright © 2004 The Seattle Times Company

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