From: Steve Ballmer
Sent: Thursday, January 22, 2009 6:07 AM
To: Microsoft - All Employees (QBDG)
Subject: Realigning Resources and Reducing Costs
In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business. I want to tell you about what we're doing and why.
Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 per cent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.
The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.
But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.
Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.
During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.
Now we need to do more. We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities. The current environment requires that we continue to increase our efficiency.
As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We'll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.
Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.
To increase efficiency, we're taking a series of aggressive steps. We'll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We've scaled back Puget Sound campus expansion and reduced marketing budgets. We'll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.
Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we'll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don't, we will also offer severance pay and other benefits.
The decision to eliminate jobs is a very difficult one. Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company's cost structure so that we have the resources to drive future profitable growth. I encourage you to attend tomorrow's Town Hall at 9am PST in Café 34 or watch the webcast.
While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.
With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.
With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.
Thank you for your continued commitment and hard work.
Steve
Saturday, January 24, 2009
Friday, January 23, 2009
Layoffs in USA
Story on "Open source's role in the recent software layoffs"
InfoWorld's Story on "Open source's role in the recent software layoffs"
By now, news of layoffs at IBM and Microsoft have been reported far and wide. Some may take this opportunity to predict victory for open source. However, I'm hard-pressed to reach this conclusion. Indeed, as an IBM Software employee, I have a biased view. But hear me out.
IBM reported a 10.5 percent year-to-year increase in 2008 Software revenue to $22.1 billion. Microsoft's Server & Tools business grew 15 percent year-to-year in Q2-FY09 to $3.74 billion. I call out the Microsoft Server & Tools business division because the majority of Microsoft's products that compete against open source (Windows Server, SQL Server, and Visual Studio) reside in the Server & Tools division. Yes, you could argue that Linux on the desktop was the driver behind the 8 percent year-to-year quarterly decline in Microsoft's Client division. But it's more likely, as InfoWorld's Tom Sullivan points out, that Vista's issues drove the decline in Microsoft's Client division business.
Nonetheless, when you look at the growth rates from IBM and Microsoft's divisions that could compete against open source, 10.5 and 15 percent are very healthy growth rates. This is doubly true when the size of the revenue (tens of billions) is taken into account. So it's difficult for me to see open source as the driver behind the layoffs.
I do, however, fear that these layoffs are a precursor to similar actions we'll see from open source companies. It's been argued that open source will do better during the belt tightening due to lower initial costs. However, what's lower than $0? I've had three discussions with friends whose companies have made the choice to go with open source solutions for projects that they've typically used commercial products. These companies have decided to save costs by asking their internal developers to shoulder the cost of supporting the open source products. So while commercial vendors were kept out of these three deals, so too were open source vendors. Clearly, three isolated examples don't make a trend. But I fear that we'll see a lot more of this in 2009.
What are you seeing out there?
p.s.: I should state: "The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions."
By now, news of layoffs at IBM and Microsoft have been reported far and wide. Some may take this opportunity to predict victory for open source. However, I'm hard-pressed to reach this conclusion. Indeed, as an IBM Software employee, I have a biased view. But hear me out.
IBM reported a 10.5 percent year-to-year increase in 2008 Software revenue to $22.1 billion. Microsoft's Server & Tools business grew 15 percent year-to-year in Q2-FY09 to $3.74 billion. I call out the Microsoft Server & Tools business division because the majority of Microsoft's products that compete against open source (Windows Server, SQL Server, and Visual Studio) reside in the Server & Tools division. Yes, you could argue that Linux on the desktop was the driver behind the 8 percent year-to-year quarterly decline in Microsoft's Client division. But it's more likely, as InfoWorld's Tom Sullivan points out, that Vista's issues drove the decline in Microsoft's Client division business.
Nonetheless, when you look at the growth rates from IBM and Microsoft's divisions that could compete against open source, 10.5 and 15 percent are very healthy growth rates. This is doubly true when the size of the revenue (tens of billions) is taken into account. So it's difficult for me to see open source as the driver behind the layoffs.
I do, however, fear that these layoffs are a precursor to similar actions we'll see from open source companies. It's been argued that open source will do better during the belt tightening due to lower initial costs. However, what's lower than $0? I've had three discussions with friends whose companies have made the choice to go with open source solutions for projects that they've typically used commercial products. These companies have decided to save costs by asking their internal developers to shoulder the cost of supporting the open source products. So while commercial vendors were kept out of these three deals, so too were open source vendors. Clearly, three isolated examples don't make a trend. But I fear that we'll see a lot more of this in 2009.
What are you seeing out there?
p.s.: I should state: "The postings on this site are my own and don't necessarily represent IBM's positions, strategies, or opinions."
Layoffs in USA
Game maker Sega confirms US layoffs
Today, Sega of America confirmed to GameSpot that it is the latest third-party publisher to cut its payroll. The news comes just weeks after a particularly brutal year that saw a worldwide economic downturn hit such third-party publishers as Electronic Arts, Midway, THQ, and PlayStation 3 maker Sony.
No layoffs
Microsoft won't cut jobs in India
Source: IndiaTimes
Starting with 1,400 job cuts, software giant Microsoft will slash 5,000 jobs over the next 18 months.
"Microsoft will eliminate up to 5,000 jobs in R&D, HR, marketing, sales, finance, legal, and IT over the next 18 months, including 1,400 jobs today," the company said in a statement.
The layoff, however, would not be impacting the Indian operations. "It's not going to impact us. No job cuts in India," a Microsoft India spokesperson said in New Delhi.
In light of further deterioration of global economic conditions, extra measures to manage costs are being taken, including the reduction of head-count-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing, the company, which posted a 11 per cent decline in profit for the second quarter, added in the statement.
Microsoft's net profit declined 11 per cent to $4.17 bn for the quarter ended December 31, 2008. It had a net profit of $4.71 bn in the year-ago period.
The company has posted revenues to the tune of $16.63 bn for the second quarter. The entity's revenues stood at $16.37 bn in the corresponding period a year ago.
Starting with 1,400 job cuts, software giant Microsoft will slash 5,000 jobs over the next 18 months.
"Microsoft will eliminate up to 5,000 jobs in R&D, HR, marketing, sales, finance, legal, and IT over the next 18 months, including 1,400 jobs today," the company said in a statement.
The layoff, however, would not be impacting the Indian operations. "It's not going to impact us. No job cuts in India," a Microsoft India spokesperson said in New Delhi.
In light of further deterioration of global economic conditions, extra measures to manage costs are being taken, including the reduction of head-count-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing, the company, which posted a 11 per cent decline in profit for the second quarter, added in the statement.
Microsoft's net profit declined 11 per cent to $4.17 bn for the quarter ended December 31, 2008. It had a net profit of $4.71 bn in the year-ago period.
The company has posted revenues to the tune of $16.63 bn for the second quarter. The entity's revenues stood at $16.37 bn in the corresponding period a year ago.
Layoffs in USA
Sony forecasts first annual net loss in 14 years
Sony said Thursday it plans to cut another 1,000 temporary workers in Japan and close one of two domestic TV plants.
Sony also will offer early retirement packages to its regular, full-time workers in an effort to cut 30 percent of its personnel costs in its TV business by March 2010. It refused to give a head count but said they are part of the 8,000 job cuts announced earlier, according to Yahoo Finance
Sony also will offer early retirement packages to its regular, full-time workers in an effort to cut 30 percent of its personnel costs in its TV business by March 2010. It refused to give a head count but said they are part of the 8,000 job cuts announced earlier, according to Yahoo Finance
Layoffs in USA
Comerica bank plans to lay off 5% of workforce.
Dallas-based Comerica Inc. earned a small profit in the last three months of 2008, set aside more money for credit losses and announced plans to cut 5 percent of its workforce, according to an earnings report released Thursday.
The bank, which moved from Detroit to Dallas in 2007 and still has a large employment base in Michigan, said it has already cut about 5 percent of its labor force since late 2007. The additional 5 percent cut announced Thursday will be largely completed by the end of March.
The bank, which moved from Detroit to Dallas in 2007 and still has a large employment base in Michigan, said it has already cut about 5 percent of its labor force since late 2007. The additional 5 percent cut announced Thursday will be largely completed by the end of March.
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