Microsoft Layoffs Coming?

Despite hiring at a rapid clip for the last few years, even Microsoft may not be immune to the rounds of layoffs hitting the technology industry recently.Though unsubstantiated, dozens of comments at Mini-Microsoft, a blog popular with Microsoft employees, point toward the possibility of big job cuts at the company. And now, at least one financial analyst has signed onto the idea. That would be quite the turnaround for a company that's grown its workforce by roughly a third since 2005.

Commenters at Mini-Microsoft write variously that "substantial" layoffs are due on Jan. 15 (a week before the most recent quarterly results will be announced), that there will be cuts in businesses like the server and tools group that has been one of the recent bright spots for Microsoft, and that already there are signs pointing toward cuts like hiring freezes in some product groups. To be fair, others disputed signs of impending doom.

Oppenheimer & Co. analyst Brad Reback wrote last week that Wall Street would welcome cutbacks, which would "be a healthy move" for Microsoft, though he predicted layoffs would only come if Microsoft sees a "significant decline" in revenue.

Layoffs would of course be hard on those directly affected, but to some Microsoft employees, especially adherents of Mini-Microsoft's ideas, might actually be OK with some cutbacks. The anonymous Mini-Microsoft blogger has been arguing since his site's inception that Microsoft needed to slow its hiring binge (which it has done in the last few months) and cut back growing tiers of bureaucracy.

I'm no financial analyst, and while layoffs might help a lumbering Microsoft turn itself around, thousands more out of work isn't something I'd be looking forward to, especially as unemployment ranks continue swelling and analysts circulate discussion cuts at even other healthy-seeming companies like Google. Even Mini says Microsoft cuts should have come long ago and been done "responsibly" rather than in some big purge.

For now, there's no major investor pressure on Microsoft to make cuts and no indication from Microsoft that head count will go down, but if others sign onto Reback's premise and top Microsoft ranks see dramatically shifting winds in the business, Microsoft may be pushed to join the dubious ranks of Sun, Nortel, and AT&T in cutting significant staff due to the economic downturn.