Sad Day For Microsoft: 5,000 Laid Off, Earnings And Revenues Down

http://www.techcrunch.com/2009/01/22/sad-day-for-microsoft-5000-laid-off-earnings-and-revenues-down/

by prakash • 18 years ago

75 69 18 years ago

techcrunch.com

edw519• 18 years ago

I feel sad for the people but not for Microsoft.

In fact, I could even feel happy faster if Windows would load the page a little quicker.

dilanj• 18 years ago

Anybody has an idea of the percentage of developers out of that?

ojbyrne• 18 years ago

The announcement mentions R&D and IT, which probably includes some developers, but it doesn't say Engineering. They also say they're going to continue to hire, while reducing headcount - sounds to me like winnowing the herd.

Goladus• 18 years ago

At a company that size there doesn't actually have to be much more to it than what they say. Project A might have too many developers and not enough QA, project B might be short developers and too much QA. Project A gets dev positions cut and project B gets QA positions cut, but they're still hiring for the open slots in both cases.

At a small company, it's fairly trivial to just move people from A to B etc. But when you're steering a ship with thousands of employees it's not worth it.

boundlessdreamz• 18 years ago

Microsoft are cutting up to 5,000 from a total of 90,000 employees - 5.5% of its workforce.

http://slashdot.org/comments.pl?sid=1100931&cid=26559719

medearis• 18 years ago

"Microsoft announced today that it will be laying off up to 5,000 people over the next 18 months... Microsoft also says that it will continue to hire..."

I don't know what percentage of those are developers, but my guess is that it will include a significant percentage. Does anyone else see a problem with this approach to hiring? To me, it seems to reflect a lot of the negative aspects of the "career" software engineer. After a few years on the payrolls of mega-corp, you get replaced by someone younger, cheaper and with more recent knowledge. Perhaps it's inevitable with a competitive labor market... just kinda sucks if you ask me.

byrneseyeview2• 18 years ago

"I assume this confirms my previous bias. By the way, did you notice how this story provides even more evidence that my bias is correct?"

boris• 18 years ago

They can replace you if you are just a coder. If, on the other hand, you work on an important product, acquire domain-specific knowledge, and know the code inside-out, then replacing you with someone else will be a lot harder.

Think, for example, about the folks who work on the Microsof's C/C++ compiler. I doubt any of them need to worry about their job. On the other hand, if all you did is implemented the Shutdown button for the next release of Windows then, sure, you can be easily replaced.

iigs• 18 years ago

This actually happens a lot at Microsoft; the reason why it's unheard of is they're normally hiring more people than they're RIFing. The Microsoft reorg 30 day job search is a way of life for people in some disciplines and teams there.

Much like high level programming can "waste" large numbers of clock cycles, cutting huge orgs while hiring other ones certainly doesn't seem efficient, and is especially grating given that we're talking about livelihoods, not zeros and ones. Unfortunately I don't think anyone has come up with a paradigm that works a lot better than this, although I'd be curious to hear of any large successes.

After a few years on the payrolls of mega-corp, you get replaced [...] Perhaps it's inevitable with a competitive labor market...

Yeah, it was a feature when many of us were getting in during high-school, but it sucks as an incumbent. I guess the takeaway is to stay hungry.

herdrick• 18 years ago

And is this mostly in Redmond/Seattle area?

sgk284• 18 years ago

This concerns me... I've got a ton of friends at Microsoft including my co-founder that is moonlighting with me on a start up (hopefully he won't need msft for much longer). I don't understand why a company that spends so much trying to get the best talent in the industry and has as much cash as Microsoft does would throw a good percentage (5.5%) of their workforce back to their competitors. Seems priorities are misplaced, not to mention the tons of negative morale that mass layoffs cause.

mdasen• 18 years ago

For all we know, many of the layoffs are non-developers. Plus, there are developers that are sub-par at any firm of Microsoft's size so maybe they're trimming them as well.

Hopefully it isn't as bad as it sounds.

mtkd2• 18 years ago

Do you not think the competitors are going to have to reduce heads too?

There is some denial amongst the startup community at the moment - this recession will be very long, very painful and few will be exempt - those that cut early and cut deep may survive okay - if they have revenue.

natrius• 18 years ago

"There is some denial amongst the startup community at the moment - this recession will be very long, very painful and few will be exempt"

That is not the consensus among economists: http://www.voxeu.org/index.php?q=node%2F2785

IBM expects a good 2009: http://www.nytimes.com/2009/01/21/technology/companies/21blu...

bprater• 18 years ago

Dead wood must be hacked from the tree.

It's what Ballmer should have really said, but couldn't.

gamble2• 18 years ago

He'd have to start with himself, after all.

ashu• 18 years ago

This is a good opportunity / excuse to get rid of some of the severely under performing people.

tocomment3• 18 years ago

I see this as resources getting freed to go towards a better use.

villageidiot• 18 years ago

Like what? Flipping burgers?

That "better use" may be elusive for some.

omouse• 18 years ago

He was talking about the cash, not the people ;)

mynameishere• 18 years ago

Some people at Microsoft (or any company) might contribute more by just that.

known2• 18 years ago

Microsoft has been hoarding cash instead of reinvesting it. http://finance.yahoo.com/q/ks?s=MSFT

I think it is time to regulate market capitalization (not more than 2 times quarterly revenue) of all listed companies.

I believe it will enhance entrepreneurship in America.

euroclydon• 18 years ago

I have the impression that, if anything, corporate America has the opposite problem: too many corporations being forcefully taken over, loaded up with debt to pay high officer salaries and give dividends, then left to flounder and lay people off because of a short-term strategy design to get a few people rich.

byrneseyeview2• 18 years ago

I think it is time to regulate market capitalization (not more than 2 times quarterly revenue) of all listed companies.

It would 'enhance entrepreneurship' if a software company had the same price/sales ratio as a steel company?

fallentimes3• 18 years ago

There's only so much to reinvest it in. Once you have ample cash reserves, it's usually best to issue dividends, which is what they've done.

I think it is time to regulate market capitalization (not more than 2 times quarterly revenue) of all listed companies.

You have to be trolling. What about growth companies and growth rates? What about companies that issue dividends vs. ones that don't? What about _profit margins_?

known2• 18 years ago

I am not trolling.

I stand by my proposal which I believe is

1. a win-win proposition and

2. makes America more competitive

daniel-cussen• 18 years ago

To others who replied: why the dogpile? -12? known's being civil.

kragen• 18 years ago

The downmodded poster is civilly proposing that we essentially outlaw speculative public investments — those in companies that don't yet have significant revenue. Under the policy suggested (price to yearly revenue of no more than 8×), the Industrial Revolution would not have happened, nor would the semiconductor revolution or the software industry. Furthermore, their policy would periodically prohibit trading in any companies that had large revenue volatility — except at fire-sale prices.

You can make an argument that these are desirable social aims, or at least they are drawbacks that are worth the costs, but the poster has not attempted to make such a case. Consequently others assume that they don't know what they're talking about, or that they're deliberately proposing a dumb idea in order to get reactions ("trolling").

wayne• 18 years ago

The Mini-Microsoft blog comments are a good place to read Microsoft employee reactions to this: https://www.blogger.com/comment.g?blogID=7555958&postID=...

fallentimes3• 18 years ago

5% really isn't that many. Sounds like a good excuse to cut the chafe.

zzzmarcus• 18 years ago

When 5% means 5,000 people without jobs, it's a lot. I don't work for MS, but I live in Seattle. I guarantee you every tech company in the area is affected in some way by this.

Within MS, the uncertainty will be detrimental to the entire culture there until all they layoffs are done and probably for quite awhile after that.

Outside MS seeing the largest company in town, one that rarely lays people off, axe so many jobs will have everyone nervous. No matter what your feelings about MS are, their influence in Seattle (not to mention elsewhere) is huge and a layoff of this size means a lot.

fallentimes3• 18 years ago

I wasn't making a value judgment or arguing against any of the other points you mentioned.

Headlines often do this. When it's a big actual number and a small percent they post the actual number. When it's a big percent, but a small actual number, they post the percent. It's one thing if they're cutting tens of thousands of jobs and 20% of their work force. But most big corporations are so inefficient, this feels like a natural layoff/reduce the chafe move. We'll find out soon enough.

dmv• 18 years ago

Not all of the tech impact will be negative. There was a serious impending office space glut in Seattle and Bellevue coming; Microsoft has been the tenant every developer wanted. With the all-but-done deals collapsing, and anticipations of space contraction:

* South Lake Union: http://seattlepi.nwsource.com/business/395046_msftofficespac...

* Eastside: http://seattle.bizjournals.com/seattle/stories/2009/01/19/da...

...the glut will be even more pronounced. Good for growing companies that might want to increase their Class A space; much stronger negotiation leverage.

gamble2• 18 years ago

That assumes Microsoft knows how to identify the chaff. Given their baroque and top-heavy management, I'd say it isn't their strong point.

wastedbrains2• 18 years ago

I am just not really surprised. Their tech is just not the best in any category.

I hosted on windows server, now Linux I had my PC on windows, now I run OSX and Linux. I had a pocketpc phone which killed the palm and then completely stopped innovating and was in some cases still very buggy, now I have an iPhone. I used Office, then switched to open office and now 80% google docs. I have never liked MS browsers, Firefox all the way. I can't think of a single web property from MS I use...

With them loosing all the developers, developers, developers... It doesn't take long until they start to loose people that are leading everyone elses technology choices.

(I admit visual studio is pretty sweet, but I use Ruby)

potatolicious4• 18 years ago

I was just about to say that. About the only MS product I actually like (as opposed to use out of necessity) is Visual Studio. It's the only one that keeps innovating and has a feature set ahead of much of the competition.

Well, I gues add Xbox to the list. MS came into the market and beat Sony on features fair and square, and built up a whole new meaning for online multiplayer. Good for them. If only their Windows and Office teams were half as innovative.

arockwell• 18 years ago

Xbox Live is the only truly innovative product I can think of that MS has put out in quite a long time. And even Xbox Live is getting pretty old.

arebop• 18 years ago

OK, but on the other hand, when has their tech ever been the best in some category? I can think of some interesting things they've done in MSR and even a couple of decent products they've made, but on the whole Microsoft's success in business does not seem to have been related to their technical achievements.

wastedbrains2• 18 years ago

Interesting point, but for a long time I think linux on the desktop really just couldn't cut it for a decent experience. Apple before OSX was untouchable as far as development experience... So there was a long period that I would say Windows was the best tech in the OS market, by quite a bit.

rbanffy• 18 years ago

Maybe now they will be able to focus on creating competitive software like they did in the late 80s.

jjs• 18 years ago

> Maybe now they will be able to focus on creating competitive software like they did in the late 80s.

I hope not!

I'd much rather eat their lunch while they eat their dogfood...

jonursenbach• 18 years ago

Perhaps they shouldn't have spent so much money on those shitty ads with Seinfeld.

dmix• 18 years ago

To be fair, it sounded like a good business decision but it was poorly executed.

thorax• 18 years ago

It's hard to say what the quarter would have been like without a major ad push in Q3. Maybe the ads were bad, but maybe their revenue would have been worse without them-- solely from a business perspective, you have to be careful with statements like that.

For all I know, their advertisement strategy is what saved the company from needing to lay off 20k in this announcement.

thomasmallen• 18 years ago

Unlikely. Those Seinfeld ads didn't actually try to sell anything. A bit of overpriced, mild brand reinforcement most likely would not have affected the company's short-term prospects.

By the way, what M$ is doing here is very screwed up. They're laying off the first batch (1400) immediately, but using the remaining 3600 as a threat to make competition cutthroat. I might just quit if I worked there.

bocalogic• 18 years ago

5000 very talented people...MS has enough cash they could have sponsored all of them in a new venture. what a waste

ComputerGuru• 18 years ago

You're assuming they're "very talented people..." but that's not necessarily the case. Given Microsoft's size and breadth and the fact that they've been hiring and not firing all these years, it's to be take for granted that they've gathered a number of people that are as brilliant and talented as they'd like over the years... so perhaps this isn't as bad as it seems.

rajat• 18 years ago

The headline's a bit misleading, isn't it? Revenues and earnings are not down; they actually grew, but not as much as expected.

Still looks bad, I guess, compared to Apple (disclosure: I use Apple laptops and desktops) which reported great numbers. But still, "Earnings and Revenues Down" is quite a bit different than "Grew Slower Than Expected"; especially in an economic downturn.

Client revenue declined, which is caused by, I presume, Vista woes. Server, Tools, XBox revenues all grew.

fauigerzigerk• 18 years ago

That's not entirely correct either. Revenues are indeed slightly up, but earnings are down: http://www.cnbc.com/id/28791677

RobGR• 18 years ago

1.5 billion devided by 5,000 people is $300,000 saved per person let go, unless I miscounted zeros in doing that calculation.

That seems high, I think usually companies claim savings of around twice the employees salary when they fire people.

Of course they also mention reducing contractors also, but then they are also hiring more too.

sounddust• 18 years ago

Microsoft has one of the world's greatest health insurance packages. They also have one of the best overall benefits package (much better than Google, for example). They are saving multiple years' worth of salary per employee by letting them go. And the layoffs have allowed them to cancel/delay the purchase of several lots of real estate. I actually thought it would be more than 1.5 billion estimated.

Also, they are apparently laying off a lot of LCA (lawyers) who probably are very well-paid.

dfranke• 18 years ago

Why so many dismayed comments? Hackers should be celebrating. Microsoft and its products are the antithesis to everything software and software companies ought to be. We've been waiting decades to see the empire crumble. Now that it's finally starting, we're worried about a few coders having to go find work with someone non-evil?

holygoat• 18 years ago

I somehow suspect there would be more comments on this post here on HN if anonymous comments were allowed.

sabat• 18 years ago

How could this have happened? Ballmer was just so confident. I mean, it was like yesterday when he was bragging to the entire assembled Redmond staff how they would "continue to allow others to innovate." Looks like that's worked out really well for Microsoft.

Sad Day For Microsoft: 5,000 Laid Off, Earnings And Revenues Down

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