5000 Jobs To Go At Microsoft After Software Sales Crash

Bellwether software company Microsoft has announced that it will officially cut jobs for the first time in its 34-year history after its sales fell significantly in the past year.

More than 5000 employees at the world's largest software company will be given the boot in the next 12 months with 1400 being showed the door immediately.

Microsoft is expected to reduce its operating expenses by up to $1.5 billion and fiscal year capital expenses for this year by $700 million as it considers the future of some of its 96,000 employees worldwide.

The company profits dived by 11 percent in the past quarter to $4.71 billion while revenues were up by 2 percent to $16.63 billion, pointing to significant pressures on the company's bottom line.

Shares in Microsoft fell heavily, reaching their lowest in 11 years, reaching $17.01 down by 11.71 percent. Most of the US technology giants followed suit with the exception off Google and HP.

Sources close to the process say that Microsoft's Entertainment and Devices Unit, Server and Tools and the Business division are apparently going to be the most hardly hit although all areas within the company are expected to be hit.

The majority of the cuts is expected to be in the Seattle area in Washington and although the economy has slowed down significantly, Microsoft is still recruiting in strategic segments like search.

Steve Ballmer, Microsoft CEO, reckoned that, "While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach."

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Our Comments

Sales of Client related division including Windows Operating System were down by 8 percent. The company's entertainment division has been one of the better investments with its Xbox console quite well with a 3 percent growth. Surprisingly, servers sales are well grew by 15 percent, quite exceptional bearing in mind the current dire economic situation.

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