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Microsoft layoff rumors continue their swirl

Earnings report due in two weeks will tell true story

By , Network World
January 05, 2009 06:22 PM ET

Network World - The on-again, off-again rumors of layoffs at Microsoft appear to be off again after CNBC reported that the company would not have layoffs ahead of its January earnings report.

CNBC, citing Microsoft sources, said that cuts will be made through attrition and within the ranks of contract employees and not from full-time staff.

Microsoft said it had no comment on the layoff rumors, but clearly with the state of the economy no company is immune.
Chris Liddell, Microsoft’s CFO said during the October earnings report the company was adjusting downward its guidance for the second fiscal quarter of 2009.

The report on that quarter will come Jan. 22.

Liddel said the company’s strong cash flow, high unearned revenue and plentiful cash on hand would “allow us to weather any economic recession in relatively better terms than most.”

If Microsoft does have layoffs, any hits in the Jan. 22 earnings report to those particular numbers will answer questions of “why?”

Liddell also advised financial analyst in October, “we are assuming a mild recession and a relatively modest growth rate for IT based products.”

He added that Microsoft still foresees an “increase in demand for our products that will grow revenue from single digits to low double digits this financial year.” Microsoft’s financial year ends June 30, 2009.

But Liddel predicted that growth would be judged as an exceptional performance in the current economic environment.
But that environment over the past few weeks has fostered reports from bloggers that Microsoft would layoff staff, including speculation of as much as 17% of its workforce, which stands at 94,286.

Bloggers at Fudzilla, which made the 17% claim, later offered a clarification saying contract staff were likely on the front lines of cost cutting but that full-time employees would be impacted in some poor performing divisions, which they did not name.

One of several speculations even came from stealth Microsoft employee Mini-Microsoft, whose blog has been a constant source of company churn for many years.

But Mini-Microsoft later clarified his report and posted a blog with the title “No layoffs at Microsoft.”

Rumors of layoffs have been swirling as far back as mid-December when Brad Reback, an analyst with Oppenheimer & Co., said in a report that Microsoft layoffs would be “well-received" by Wall Street. He also said it would show that profit is more important than growing revenue, a well-know trait Microsoft has developed.

Read more about software in Network World's Software section.

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