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Microsoft plans to fire 5% of workforce

MICROSOFT Corp will cut 5,000 jobs, or about 5 percent of its workforce, as the global recession eats into demand for software.

The reductions, Microsoft's first company-wide firings, will take place in departments including research, sales and marketing, the company said yesterday in a statement reported by Bloomberg News. The measure, announced with the company's second-quarter earnings, will save US$1.5 billion, Microsoft said.

Chief Executive Officer Steve Ballmer is under pressure to reduce costs as sales growth dries up amid global financial chaos. The company's Windows division, which accounts for about a quarter of sales, is suffering after personal-computer shipments rose at the slowest rate in six years in the fourth quarter.

"No one is of the mind that things are fine: PCs are in a terrible state," Sarah Friar, an analyst at Goldman Sachs, said before the release. "Enterprise spending is getting worse."

Microsoft's net income during the second quarter of the fiscal year was US$4.17 billion, or 47 US cents a share, compared with US$4.71 billion, or 50 cents, a year earlier. Sales were US$16.6 billion in the period, which covered the last three months of 2008.

Analysts predicted a profit of 50 cents a share and sales of US$17.1 billion, according to a Bloomberg survey. In October, the company forecast profit of 51 cents to 53 cents a share on sales of US$17.3 billion to US$17.8 billion.

Microsoft rose 90 cents, or 4.9 percent, to US$19.38 in Nasdaq Stock Market trading yesterday. The shares lost 45 percent of their value in 2008.

The company needed to cut costs to allay concern among investors that its expenses were too high given the state of the economy, said Heather Bellini, an analyst at UBS AG in New York. She expected the company to slice 5 percent to 7 percent from an operating expense budget of US$27.4 billion by cutting full-time employees and contractors.



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