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Originally published November 5, 2009 at 12:07 AM | Page modified November 5, 2009 at 12:41 PM

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Microsoft's job cuts 'complete' — for now

Microsoft reminded Seattle on Wednesday it's cutting more jobs than expected in a broad, cost-cutting program that began in January, the first major layoffs in its 34-year history.

Seattle Times senior technology reporter

Microsoft reminded Seattle on Wednesday that when it rains, it pours sometimes.

The software giant said it's cutting more jobs than expected in a broad, cost-cutting program that began in January, the first major layoffs in its 34-year history.

The company said it was ahead of schedule and had cut 5,800 jobs. That's up from the 5,000 it had planned to cut by 2010.

At least 1,400 jobs have been lost in the Puget Sound area, including 200 Wednesday.

Microsoft spokesman Lou Gellos said the layoff program announced at the start of 2009 is "complete," but more cuts could come as the company continues adjusting to economic conditions.

Wall Street may appreciate the approach and punctuality, but more uncertainty is left in a region where Microsoft has been a bulwark during previous downturns, and people are still reeling from Boeing's recent decision to begin building jetliners in South Carolina.

Microsoft's business appears to be on a roll. The stock jumped back to the high $20s last month after the company reported Windows and Xbox sales were better than expected. Shares closed up 2 percent Wednesday to $28.06 after the layoff news.

But CEO Steve Ballmer isn't cheering as much. During a visit Monday to South Korea, he said he's not expecting tech spending to return to pre-downturn levels.

Gellos reiterated the cautious outlook Wednesday, saying Microsoft will continue to make whatever adjustments are necessary.

"If that means we focus on different businesses or take care of employee head-count issues, we would do that."

It's a new tone for a company historically loathe to use the word "layoff." But new executives and economic conditions have made efficiencies and cost-cutting a more public mantra at the largest software company.

Some employees suspected cuts were coming this week. The Nov. 4 date was accurately predicted by commenters on the Mini-Microsoft insider blog, who noted that was the day the human-resources department had reserved numerous conference rooms across the campus.

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Still, the pink slip surprised employee Don Dodge, a Boston-based business-development director. "Totally blindsided," he said.

Dodge, 52, is an avid social networker and regular at startup conferences. Word spread among tech enthusiasts, and he said he was discussing jobs with Amazon.com, Cisco, Dell and others by the end of the day.

He is losing more than his job. He's also missing out on stock awards he would have received if Microsoft waited a few weeks, until his five-year anniversary Nov. 24.

"I'm already over it and looking forward," he said.

Gellos wouldn't say which areas are being cut or if they correlate to Microsoft's recent decisions to terminate businesses such as the MSN Direct information service and Office Accounting products.

Work tends to slow after major products are released. The company just shipped Windows 7, and the next version of Office productivity software is nearly done.

Gellos also declined to say exactly how the cuts have affected head count, because the company continues to hire "in certain focus areas." Some people whose jobs were cut found work in those 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.

Cutbacks at Microsoft and other companies became evident in the state's employment count in April, when software jobs began falling.

"Those are good-paying jobs for highly educated people. Obviously, losing those jobs does have an impact," said Desiree Phair, a state regional labor economist in Seattle.

Microsoft's layoffs came in three waves, beginning in January. Another came in May, when Ballmer reiterated the company was responding to the "global economic downturn" with a "plan to adjust the company's cost structure through spending reductions and job eliminations."

"This is difficult news to share," he wrote at the time. "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."

Microsoft still hasn't retreated much from a big hiring surge that began in 2007.

Nearly 13,000 people were hired during the 2007 fiscal year, the biggest gain in a decade of surging Microsoft employment growth. During that same period, the company ramped up its physical presence with an enormous, $1 billion-plus campus expansion that began in 2006.

Portions of that project were suspended when cutbacks began, and the company cut pay to temporary workers and consolidated vendors. But it continued to spend heavily on data centers around the world to improve its search business and compete with Google and others developing online software and services.

Dodge tried to look on the bright side. "These things have a way of sorting themselves out," he said. "Given enough time, everyone finds a new place where they can be happy and where they belong."

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

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