Software giant Microsoft announced Thursday plans to slash up to 5,000 jobs as the company absorbs the effects of the world economic crisis, dpa reported.
The cuts are the first companywide reductions in the software giant's 33-year history and came just a day after computer chip maker Intel announced that it was shuttering five plants in the US and Asia with the loss of up to 6,000 jobs. Microsoft employs around 96,000 people worldwide.
The Seattle, Washington-based firm, in making the announcement, also said that its profits in the second quarter of its current 2008- 2009 business year fell by 11 per cent, to 4.17 billion dollars. Microsoft shares fell some 7 per cent in early trading.
The earnings in the quarter ending December 31 came on sales revenues of 16.63 billion dollars, down 2 per cent, Microsoft said.
Microsoft said that about 1,400 of the job cuts will be carried out immediately, with the remainder to take place over the next 18 months. The company estimated that the move will save it some 1.5 billion dollars.
"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 the soundness of our approach," Microsoft chairman and CEO Steve Ballmer wrote in an e-mail to employees.
Microsoft said that in view of the uncertain world economic climate, it could not provide any detailed earnings projections, but that the second half of the current business year was virtually certain to show lower profits and sales as consumers and businesses hold off on purchasing new computers and other tech equipment.
"Economic activity slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact," said Chris Liddell, Microsoft's chief financial officer, in a statement. "We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year."