Saturday, January 24, 2009

Microsoft layoffs 5000 employees

The global financial crisis spark the economic instability and dampen the sustainable growth to both the growing and established economy. The devastating long-run effects and consequences on economy are unpredictable but certainly cause great damage to the global economy.

PC shipments and IT expenditures were adversely affected and suffered biggest drop as consumers reined in spending. It is one of the adverse effects of the economy recession. Ironically, Microsoft are not immune to the effects of the economy. The realities of the deteriorating economy forced Microsoft to take important steps to realign the business.

Microsoft said that it would layoff up to 5,000 employees, or about 5 percent of its work force - the first significant cuts in the company’s 34-year history. Of that amount, 1,400 are losing their jobs.

Microsoft also says that it will continue to hire and that the net headcount reduction over the next 18 months should amount to between 2,000 and 3,000.

The layoffs, along with salary freezes, the elimination of contract workers, lower marketing spending, and other measures are expected to reduce operating expenditures by $1.5 billion this fiscal year.

The layoffs follow a rare decline in sales of Microsoft’s Windows operating system for personal and business computers in the second fiscal quarter. Net income for the period, which ended Dec. 31, fell 11 percent to $4.17 billion. Other major players in the personal computer industry are reporting similar drops in demand and paring their work forces to adjust.

Intel, the leading maker of chips for PCs, said it would layoff 5,000 to 6,000 workers and shut production at some plants after revenue dropped 23 percent and net income fell 90 percent in the fourth quarter.

Advanced Micro Devices, also a large supplier of PC chips, reported a 33 percent decline in fourth-quarter revenue to $1.16 billion, while posting a $1.42 billion loss. Earlier this month, A.M.D. said it would reduce its work force by close to 9 percent.

The question remains: How seriousness is the negative impact of the layoff to the global economy as well as the Malaysian economy?

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