Microsoft layoff speculation: 9K to 15K employees?

Rumors continue to escalate that Microsoft will layoff thousands of employees sometime this month -- although Microsoft has denied that layoffs will occur -- at least in January. We reported that last week that analyst Brad Reback at brokerage firm Oppenheimer & Co, recommended that Microsoft ax 10% of its workforce -- or about 9,000 jobs. Today, Fudzilla says it believes the number of cut jobs will be as high as 17% of the company's workforce -- although it speculates that this high number won't all be layoffs -- some current open jobs will be left unfilled. Fudzilla says:

"We've been told that some division of Microsoft has cut their expected sales for 2009 by as much as 90 percent and this is a huge number. This in turn means that there's less work for the supporting departments and as such Microsoft has a lot of redundant staff."

Steve Ballmer and other Microsoft executives officially denied layoffs in various statements in December, according to a post from Mini-Microsoft that documented all such statements. At the same time, all of these denials left the door open for a reduction of jobs that is somehow not officially labeled a layoff. For instance, the blogger reports on this tidbit that circulated last month, the italics section is attributed to Microsoft insiders:

"From 12/23/2008, a more likely scenario that feels like a layoff but gives corporate cover: MS will not do straight layoff. It will re-org, and cut groups/projects. Say 2000 FTE are given 4 weeks to land a new job within MS, I bet 1500 will find nothing and will be forced to leave. So no layoff, let's call it "reorg-off" and MS can even save layoff package."

No one at this point should be surprised to see Microsoft announce some kind of reorganization that results in loss of jobs. However one Twitter friend of Microsoft Subnet's has told us that the constant rumors of layoffs is extremely demoralizing to the teams of employees at Microsoft -- as most of them work a lot of hours and have been calling for additional hands on deck. Still, Microsoft's stock has been hovering below $30 for too long for investors not to be fed up. Unless Microsoft can quickly invent "the next-great thing" it will need to take some kind of action to make Wall Street happier. Executives have to show a long-term future geared toward growing profitability.

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