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Microsoft Lays Off a Few More than Expected

We all knew that Microsoft has been systematically getting rid of 5,000 or so employees (while hiring others at the same time). Well, what might be the last of the bloodletting seems to be taking place now. What's interesting about that is, apparently, the total number of layoffs will actually exceed 5,000.

Should we take this as some sort of sign? Or is this just Microsoft carrying out the last phase of its plan to kind of, sort of slim down? The company's latest earnings report pleased Wall Street but still showed (not unexpected) declines in revenues and profits.

Nevertheless, Microsoft is still a big company. Take a look at the chart in this TechFlash article; it indicates that Redmond had not quite 20,000 employees back in 1995 and now has more than 90,000. We at RCPU hate to see people lose their jobs and would never advocate that Microsoft get rid of any more employees. The truth is, though, that Microsoft is still a bloated company, weighed down by its desire to dominate every category in the software industry (and a few others) all the time.

Cutting a little fat in terms of product lines probably wouldn't be the worst thing for Microsoft. And we hope that the new folks who are coming in are at least moving into roles with Azure or something related either to the cloud or to Microsoft's flailing mobile efforts.

We've long heard here and there that Microsoft doesn't recruit the quality of employee it used to get because the company's once-lucrative stock options -- apparently a big chunk of an employee's compensation in Redmond -- aren't so lucrative anymore. The company's stock has been largely flat for years now.

One way to boost a stock price is to cut costs, of course, and that's exactly what Microsoft is trying to do with these layoffs. Again, we hate layoffs, but if there's any silver lining to this scenario, it's that Microsoft might just be able to shrink itself enough to become more focused, more efficient and less bloated and to get its stock price moving up again. That could lead to improved recruitment and ultimately to more innovation and better management. And all of that could lead to bigger profits for Microsoft partners.

Anyway, that's a very long-term take on a tiny news story. But it'll be worth watching Microsoft's personnel moves in the months and years to come as the company seeks to establish a desired level of staff and expenditures. This is new territory for Microsoft. Until now, the company had been all about growth. How Redmond navigates these choppy new waters will have a lot to do with its future and those of its partners.

What's your take on Microsoft's financial condition? How does it affect you? Sound off at lpender@rcpmag.com.

Posted by Lee Pender on November 05, 2009 at 11:55 AM


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