News

Microsoft Confirms Plan To Slash Marketing Jobs

• By Kurt Mackie
• February 01, 2012

A statement from Microsoft first published in a a GeekWire story on Wednesday indicates the company is cutting marketing positions.

Microsoft's statement to GeekWire does not specify the number of cuts or when they will occur. However, author Todd Bishop suggested it might be around 200 positions and start Wednesday. A Twitter post from Microsoft marketing team member Maher Al-Khaiyat stating that the job cuts would be announced Wednesday was deleted.

According to Microsoft's released statement, a "small percentage of marketing positions" will be cut.  

"Given the rapid changes in technology and the shifts in how our customers connect with Microsoft, great marketing is more important than ever to Microsoft's future success," the statement reads. "We're taking steps to improve the effectiveness and efficiency of our marketing, and to strengthen career paths for marketers at Microsoft. Some of these changes involved the reduction of a small percentage of marketing positions, to better align our resources with our business needs and clarify roles across the marketing function."

Microsoft provided no details in response to a press inquiry, except to send the statement above. The Mini-Microsoft blog, which purports to be written by a Microsoft employee who advocates cutting jobs at the company, offered no information at press time. Microsoft had its first major mass layoff in the company's history back in 2009, when around 5,000 employees were let go, but it has cut positions since that time. The company estimated it employed 92,303 employees worldwide as of Dec. 31, 2011.

The latest announced job cuts were somewhat expected, having been reported as a rumor in January. Back then, it was thought that the Central Marketing Group was targeted for layoffs. That group has around 2,600 personal, consisting of 600 full-time employees and 2,000 independent contractors. It was rumored that Chris Capossela, Microsoft's chief marketing officer, had planned the personnel cuts to eliminate overlapping job responsibilities. None of these details were confirmed by Microsoft.

So far, Microsoft's sales and marketing expenses for its 2012 fiscal year have amounted to $6.66 billion, as reported for its second fiscal quarter, which ended on Dec. 31, 2011. That figure represents a 1 percent increase compared with the $6.63 billion reported for the same period in 2010. The company currently has entered its third fiscal quarter. It recently described fiscal 2Q 2012 financial results.

Even though Microsoft's sales and marketing expenses have stayed relatively flat this fiscal year, the company had some cost increases due to "head-count related expenses," according to the company's latest 10-Q report (.DOCX).

"For the six months ended December 31, 2011, sales and marketing expenses increased primarily reflecting a 7% increase in headcount-related expenses, offset in part by decreased marketing spend" (p. 36).

Those headcount expenses aren't described. However, a look at Microsoft's latest 10-Q report suggests the expenses may have been located in the Entertainment and Devices Division, which produces Windows Phone, the Skype acquisition and the Xbox gaming console.

"Sales and marketing expenses increased $94 million or 27%, primarily reflecting higher headcount-related expenses, including Skype headcount, and amortization of acquired Skype intangibles," the 10-Q report states on p. 34.

Microsoft announced its acquisition plans for Skype, a provider of voice-over-IP telephony services, in May 2011 for $8.5 billion. Skype likely was Microsoft's biggest acquisition yet, based on purchase price.