Software maker Microsoft announced Thursday it will cut up to 5,000 jobs in the next year and a half, or 5.5% of its global workforce, citing further deterioration of global economic conditions.
The company also posted lower fiscal second-quarter earnings that missed analysts’ forecasts.
Microsoft will slash 1,400 positions immediately, with the rest of the cuts coming by June 2010. The company said it will save about $1.5 billion in operating expenses and $700 million in 2009 capital expenditure.
Shares fell 7% on the news. Second quarter net income is down 11% from last year. Yesterday we heard this news from Intel:
Intel said on Wednesday it will close chip plants to align its manufacturing capacity to current market conditions. Between 5,000 and 6,000 employees will be affected.
The world’s largest chipmaker will halt production at five “older” factories.[…]
“During the normal course of events it’s a long-term planning process to take the older capacity offline. And all of these factories are on a roadmap to be rolled out of the network at some point. But the financial decline that we’re facing today accelerated that process,” he said.
Tech types take heart — no less a figure than apocalyptic Harvard economic historian Niall Ferguson, author of The Ascent of Money, finds hope amid all the economic doom and gloom:
The core, the heartbeat of economic growth, if you like, is innovation — technological innovation, managerial innovation and financial innovation.
And one of the fascinating things that struck me as I worked on the 1930s and the 1970s, and looked even further back to the first great depression that struck in the late 19th century, when prices fell for more than two decades, is the fact that innovation can keep going even in the toughest times.
Even in the 1930s, American corporations were still making major advances in technology. This was a time when IBM was laying the foundations for the computer, a time when RCA was transforming broadcasting. This was a time of great innovation. General Electric was in its heyday.
In the same way, in the 1970s stagflation, new companies were formed. Microsoft was one of them, Apple was another.
Necessity…is the mother of invention. And even in the toughest crisis, I have confidence that in the United States there will be innovators who set, as it were, the path for the next era of economic expansion.
And in that sense, we’ll see the ascent of money resume. And we’ll look back and say, well, we fell off a cliff then. But we picked ourselves up, and we climbed up the next mountain.