digital thoughts

Apple computers came up with good earnings yesterday. On the contrary, Microsoft corporation missed 2Q profit today. It reported 11% drop in 2nd quarter profit. Microsoft shares plunged 7% and are trading at $17.92. To make up for lost profit, Microsoft is going to terminate 5,000 employees over the next 18 months. Microsoft will terminate 1,400 employees today.

Microsoft said it was being hurt by deteriorating global economic conditions and lower revenue from software for PCs. The holiday quarter of 2008 was the worst the PC market had seen in several years.

Microsoft said that profit slipped to $4.17 billion, or 47 cents per share, from year-ago earnings of $4.71 billion, or 50 cents per share. It says the job cuts will reduce operating costs by $1.5 billion as it prepares for lower revenue and earnings in the second half of the year. The company says it is unable to offer profit and revenue guidance for the rest of the year, because of the market volatility.

So far, Microsoft appeared to be weathering the storm. It’s the first major layoff ever in Microsoft. It shows how bad the current recession is. May be the “depression” is the right word? Whatever it is, it is going to reflect in Indian job market too. Microsoft may also let go of contractors working for Indian outsourcing companies, that might have ripple effect in India.

Related Link: Steve Ballmer’s Memo to Microsoft Employees | Bangalore Jobs