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Microsoft Slashes 800 Jobs

Software maker says plan to eliminate 5,000 positions is now largely complete.
Microsoft said Wednesday that it's cutting 800 jobs this week as part of a previously announced campaign to cull 5,000 positions from its global workforce through layoffs. The company ended its last fiscal year with about 93,000 employees.

Microsoft said the cuts will be made at multiple locations and drawn from several business lines.

"At the same time, we continue to hire in priority areas, but also understand that continuing to manage our businesses closely, as we always do, can mean additional headcount adjustments," the company said in a statement.

In part due to acquisitions, Microsoft's headcount actually increased 2% in the fiscal year ended June 30. Still, the company spent $330 million on employee severance payments during the period, SEC records show.

Microsoft announced its plan to cut 5,000 jobs in January and said at the time it expected to complete the layoffs by June, 2010. However, this week's cuts means Microsoft has achieved its headcount goal ahead of schedule.

"Today, we are eliminating 800 positions spread across multiple businesses and locations and have completed our reduction plan sooner than we had anticipated 11 months ago," the company said.

The job cuts come amid slumping sales at Microsoft, where key product lines—including the Windows operating system—have experienced double-digit revenue declines in recent quarters.

In the fiscal first quarter ended Sept. 30, Microsoft reported a 38% decline in Windows sales. Much of the drop off was due to a Windows 7 upgrade program under which Microsoft deferred recognition of some Windows Vista sales.

Microsoft Office sales also declined significantly during the period, dropping 11% compared to the previous year. The company's first quarter sales fell 14% overall, while net income was down 18%.

Microsoft is hoping sales of Windows 7, released to the public Oct. 22nd, will jump start its software business. Microsoft shares were up 2.4%, to $28.19, in afternoon trading Wednesday.

InformationWeek has published an indepth report on Windows 7. Download the report here (registration required).