Report: Microsoft to rein in real estate expansion

Microsoft is expected to announce cost-cutting measures when it reports its second-quarter earnings on Thursday, including cutting back on previously announced real estate expansion plans, according to a news report.

Microsoft will delay the construction of all new buildings in Redmond except one, for at least three years, the Seattle Post-Intelligencer reported Monday, based on an internal planning and scenario PowerPoint presentation obtained by the newspaper.

Redmond is the Seattle suburb where Microsoft's headquarters are located. Microsoft will also not renew most of its leases when they come up for renewal this year and next, the newspaper reported. The real estate measures would help Microsoft save US$607 million through the end of fiscal year 2010, the Post-Intelligencer said.

In a statement, Microsoft spokesman Lou Gellos confirmed "that as some leases expire, we will not renew them." Gellos said some non-lease renewals were part of Microsoft's "plan all along," but confirmed that the construction slowdowns were "in light of the economic situation."

Broad layoffs at Microsoft, which some reports say could be announced late this week, remain "unclear," reported the P-I.

Microsoft employs 94,000 worldwide, including 40,000 in the Seattle area. Last year, Microsoft's headcount grew by 16%.

The presentation, developed by Microsoft's Real Estate and Facilities Team, assumes that the company's workforce will not grow in the next two and a half years, but will start growing by 3% a year after that, the Post-Intelligencer said.

The number of layoffs that may be announced this week has been reported to be as high as 15,000, or 16% of Microsoft's workforce, although many analysts expect far fewer. If it occurs, it would be Microsoft's first broad layoff, though the company has had at least eight small ones in the last seven years, totaling almost 1,100 employees.

Despite the real estate cut backs, Microsoft plans to keep employee perks such as free soda and other beverages and the Redmond campus van shuttle, reported the P-I.

This story, "Report: Microsoft to rein in real estate expansion" was originally published by Computerworld.

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