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12.31.08

Fudzilla: Microsoft to Fire 15,000 Employees in Two Weeks

Posted in Finance, Microsoft at 5:34 pm by Dr. Roy Schestowitz

The year 2009

Microsoft will probably be going into debt [1, 2, 3, 4, 5] more quickly than first anticipated, according to this new report from a pro-Microsoft financial Web site.

Microsoft May Accelerate Buybacks

[...]

Given the recent weakness in Microsoft’s stock, we have assumed the company will likely accelerate its pace of buyback from the September quarter of $6.6 billion to roughly $8 billion for the next several quarters, resulting in a net reduction in fully diluted shares outstanding of 300 million per quarter.

Cutbacks are necessary. We wrote about layoffs recently, so we append related links at the bottom of this post. But whereas the big news is continued discussion about Microsoft’s need to lay workers off, the bigger news, which is announced with confidence by a high-profile Web site, is that Microsoft will be axing far more than speculations first suggested.

The rumor that Microsoft was set to lay off people on January 15th, 2009 is no longer a rumor but a fact. Staff at Microsoft have been informed that the company is readying major layoffs to its worldwide operations and it’s not a small cut, either.

Currently Microsoft employs about 90,000 people across the world and from what we’re hearing, some 15,000 of those are expected to be giving marching orders come January 15th. That’s almost 17 percent of Microsoft’s total work force, not exactly a small number.

We prefer not to comment on layoffs, but expressed a point of view some days ago.
_____

  1. Quick Mention: Layoffs at Microsoft Begin
  2. Microsoft (MSFT) Sank to $18.74 Before Rebounding
  3. Microsoft Layoffs Actually Began Years Ago, More Likely to Come
  4. Eye on Microsoft: Feeling the Pinch Again
  5. Microsoft Chief Technical Officer Quits, Replacement Made for Another Quitting CEO, Operations Head Bumped
  6. Quick Mention: More Layoffs at Microsoft
  7. Microsoft Layoffs Worse Than Initially Reported
  8. Microsoft Under the Scalpel
  9. Rumours: More Microsoft Layoffs Next Month
  10. On Being Rich… On Paper
  11. We Live in Interesting Times
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25 Comments

  1. Needs Sunlight said,

    December 31, 2008 at 6:28 pm

    Gravatar

    Who’s going to pay for the rehabilitation and counselling needed to bring these deviants to a state where they are usable by society? (That’s assuming they had at least some redeeming value prior to decending to M$)

  2. oiaohm said,

    December 31, 2008 at 9:39 pm

    Gravatar

    Vista failure is hitting. Windows 7 if it fails as well MS is in big trouble.

    Question is does MS disappear with a wimper. Gets aquired. Or has Windows 7 sell. Or pulls the walking dead of SUN.

    Its not like the deal with Novell is helping them right now. Its another out going. Yes MS might be playing Novell against Linux world but Novell is a blood sucking vampire on there cash reserves and also competing with there servers for market. Not what you call helpful.

  3. twitter said,

    January 1, 2009 at 12:36 am

    Gravatar

    Quiet death? They have been screaming and thrashing for the better part of a decade.

    Windows 7 is going to fail for the same reason Vista failed, non free software development does not work well and DRM is a harmful pipe dream. The magnitude of Vista’s failure took even me by surprise and Windows 7 could be technically perfect and M$ will still fail because it still lags significantly behind free software and other non free software, such as OSX and Solaris, that makes better use of free software. 10 to 17% layoffs is too huge a hit for them to make up, if Vista was their best effort from six years of full employment and market dominance. OEMs have revolted, users are fed up and they won’t have enough developers to pull an OSX transformation. People’s acceptance of Windows was something that cost about $1 billion /month in marketing to keep up. When the money is gone, the hype and slog will go too and people will finally recognize what a third rate pile of junk Windows really is. The game is close to over. I don’t think they will survive through 2010 and might not make it through 2009.

  4. Roy Schestowitz said,

    January 1, 2009 at 2:33 am

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    Vista 7 [sic] shows many of the same symptoms as Vista circa 2005-6. Other than Windows and Office, not many products are profitable and with light or depleted cash reserves, no wonder many top managers are leaving Microsoft.

    Well… they still have intellectual monopolies… or so they thought before In Re Bilski.

    http://www.paulgraham.com/microsoft.html

  5. oiaohm said,

    January 1, 2009 at 6:01 am

    Gravatar

    Wimper of pain. Microsoft in theory could live on with money from Xbox 360′s because that branch is going ok. MS Office is also going ok but without a OS under it that is going to become a problem.

    Server market there are ready some concerning trends.

    Some how I think Microsoft cash reserves have been wasted too much for them to pull a SUN walking dead. Remember SUN has the longest history out of any still going company of losses in a row. Yes over 16 years of predictors saying SUN is dead this year and it proving them wrong.

    17 percent of staff microsoft got rid of is most likely the same amount of patent money they have to pay to Novell. Yes we might hate what Novell has done and is doing. Problem for Microsoft as I always said Novell is as evil as them. Yes Novell will suck Microsoft money dry if it can. Problem for Microsoft living is if Windows 7 fails and Next MS office fails paying Novell is going to be a problem.

    20 dollars a copy of XP Home is not a profitable level for Microsoft. Between advertising and patent vampires 20 dollars a copy is a major loss.

    All that idea that patents were a threat to Open Source. Nop they are a threat to something that can pay up.

  6. Roy Schestowitz said,

    January 1, 2009 at 6:34 am

    Gravatar

    Wimper of pain. Microsoft in theory could live on with money from Xbox 360’s because that branch is going ok.

    If I recall the figures correctly, Microsoft’s losses in this branch have exceeded $7,000,000,000 since 2001. Nintendo schools Microsoft in this generation and Microsoft is still selling consoles at a considerable loss.

    MS Office is also going ok but without a OS under it that is going to become a problem.

    SaaS like Google Apps causes Microsoft serious pain (especially in some poorer sectors like education), which is why it ‘manufactures’ dirt against it and plans to have an online version of Office, which it hardly knows how to monetise. The margins of Office are eroding pretty fast and revenue declined in this past year (e.g. April’s report).

    Server market there are ready some concerning trends.

    Demand in general is declining and GNU/Linux is more attractive.

    “Every time you use Google, you’re using a machine running the Linux kernel.”

    Chris DiBona, Google

    “Forty percent of servers run Windows, 60 percent run Linux…”

    Steve Ballmer (September 2008)

    I agree with the rest of your arguments. Microsoft has for a long time warned that Free software makes products like its own a commodity, so margins have become terrible and counterfeiting tolerated in the majority of the world (“It’s easier for our software to compete with Linux when there’s piracy than when there’s not,” Bill Gates, 2007).

  7. seller_liar said,

    January 1, 2009 at 10:35 am

    Gravatar

    Probably these times are “The End Of Vole Days”.

  8. Rui Seabra said,

    January 1, 2009 at 11:37 am

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    All that idea that patents were a threat to Open Source. Nop they are a threat to something that can pay up.

    Only uninformed (or misleading) people presented that argument.

    The serious people who have been fighting software patents have always said that software patents are a bane on making business with software, regardless of the software licensing mode.

    I was at an European Parliament hearing were many proprietary software companies (most represented by their sectorial associations) begged for preventing the legalization of software patents in Europe.

    European Shareware, particularly, explained how they WANTED to buy a patent license, but the volume was so low that the lawyers refused to give them a patent license. It wouldn’t even cover the cost.

    So they were facing the threat of being sued for not having a license noone would give them.

    That’s great for business, right? (FAIL).

  9. seller_liar said,

    January 1, 2009 at 11:50 am

    Gravatar

    More than 50% of patents are owned by 1% of companies.

    And the concept of software patent is veery stupid.And Gives power to make money doing nothing.

    End of software patents!

  10. Roy Schestowitz said,

    January 1, 2009 at 12:04 pm

    Gravatar

    That’s why they call it “intellectual monopoly”. It’s a welfare programs for monopolisers and shameless patent trolls like Raymond Niro.

  11. Will said,

    January 1, 2009 at 12:20 pm

    Gravatar

    Year after year, IBM is on the top of the list of patent holders while Microsoft doesn’t even show up under the top-10… It would seem MS is a neglible factor in the patents-question.

  12. Roy Schestowitz said,

    January 1, 2009 at 12:31 pm

    Gravatar

    IBM too is a troublemaker that we pressure; at least it does not attack Free software (neither with words nor action).

  13. Adam said,

    January 2, 2009 at 12:12 am

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    I just got hired for the Start Up Labs…should I be worried?

  14. Jose_X said,

    January 2, 2009 at 1:16 am

    Gravatar

    [Will] >> Year after year, IBM is on the top of the list of patent holders while Microsoft doesn’t even show up under the top-10… It would seem MS is a neglible factor in the patents-question.

    IBM produces a lot more hardware (not to defend their “software” patenting). Also Microsoft has a ton of (software related) applications *currently in the pipeline*. Presumably many of these would become patents.

    It’s actually not the number of patents as much as the total number of patent claims across all of those patents that matters most.

    Actually, it’s the total number of claims that impact you and which the patent holder is likely to want to enforce against you. In this respect, Microsoft (its cash cows) is threatened by Linux+FOSS much more than is IBM. That’s the key as far as FOSS advocates are concerned.

    IBM gains through our strength while Microsoft is fatally threatened. It’s like being a crime fighter and not worrying about the gun your uncle or partner has but being worried about the gun a mafia grunt has.

    Posted this not long ago: http://www.linuxtoday.com/news_story.php3?ltsn=2008-12-31-005-35-OS-NV-0002 [The first link there is broken and should be this http://boycottnovell.com/2008/12/20/mono-only-for-novell/#comment-53431 ]

  15. Jose_X said,

    January 2, 2009 at 1:52 am

    Gravatar

    [Adam] >> I just got hired for the Start Up Labs…should I be worried?

    I’m not sure what would drive you to go work for that company, but do check this out: http://www.billparish.com/msftfraudfacts.html . The later you come to the game, the more likely it is you won’t be paid everything you thought you would be paid. [This is true about any company just about, though more so for an old one.]

    Many stock options given to Monopolysoft employees in the late 90s and beyond will likely expire worthless because the pressure on MSFT stock price is huge as long as all of those written options remain exercisable (not to mention more pressure keeps being added every year). For this reason, I would demand cash/stock *today* and not “tomorrow conditioned on XYZ.” Remember, Microsoft is most likely past its greatest growth stage. The vast quantities of cash going into others’ (MS people’s) pockets today will not always be there and may not when your turn to drink comes up.

    If you don’t get out of your stint with that company what you would have liked financially, my question is if you think your stay there will have been worthwhile to you? There are less controversial or less disliked companies that are more likely to be around in 10 years than is Microsoft or where you will at least have more fun or grow more as a person. Microsoft is dominated by corporate needs (to maintain their huge cash cows and powerful levers going). That’s a tall order for them to meet daily. All’s well as long as the fortified dam doesn’t break, but they face much more pressure today than they did years ago.

    Anyway, in many ways, it’s a personality thing who you work for or otherwise how you earn your income.

  16. Roy Schestowitz said,

    January 2, 2009 at 3:00 am

    Gravatar

    Yesterday I was told that Microsoft buys back its own stock at a pace of $90M per day in order to prevent it from free-falling.

    As for patents, I pointed out one year ago (or more) that Microsoft was not producing many new products because its employees were writing patent applications rather than code; as in, “get us some more intellectual properties/monopolies before you go and clear your desk later, you’re fired.”

    This rush for patent ammunition is a gold rush; it’s too little, too late. Remember why Gates instructed Myhrvold to create Intellectual Ventures, which he now contributes to and invests in.

  17. Needs Sunlight said,

    January 2, 2009 at 4:58 am

    Gravatar

    I expect that these figures are only for full-time, permanent staff and not temps, consultants or permatemps. The layoffs are probably much deeper than let on.

    It’ll be interesting if the Obama administration shuts out the bullshitters from Halliburton, Bechtel, Microsoft, etc. For M$ that will mean a weakening of its role as a lobbying firm and falling back onto the patent troll business model.

  18. The Mad Hatter said,

    January 3, 2009 at 2:47 pm

    Gravatar

    In a couple of years Jerry Yang is going to look like a prophet, for not accepting the Microsoft buy out offer. Yes, Microsoft’s market valuation is 10 times Yahoo’s at the current time, however while Yahoo’s stock fell after the buy out was fended off, Yahoo is making money, and has a profitable business that it can go forward with, and that is likely to remain profitable.

    Microsoft on the other hand is spending money like a drunken sailor trying to shore up it’s share price. While it is making money, the costs of the share buy back will have a negative affect on the company, and it’s currently suffering from several weaknesses in it’s main markets. Specifically several OEMS are playing with their own operating systems (either Linux or BSD based) in imitation of Apple. Many large companies are looking at their expenses, and a large expense that can be cut is software licensing, by moving to a Linux/BSD/Solaris based operating system, and the existence of Ubuntu, Belinix, FreeBSD, Debian, etc. gives them a basis to build on. In fact any reasonably well trained computer person can put together a custom OS distribution based on one of the above fairly quickly, and it will have better driver support than any of the proprietary operating systems. And of course there are several free Office Suites available, and they can be quickly recompiled to run on just about anything – including obsolete operating systems like Amiga OS.

    Depending upon exactly what happens, and when, Yahoo’s market valuation should pass Microsoft’s within the next 3 years. We could see Yahoo (or Red Hat, or Canonical, or Novell) then make a play for Microsoft, though I can’t see why any of them would want to.

  19. AlexH said,

    January 3, 2009 at 3:04 pm

    Gravatar

    I would love some of these people who are predicting the downfall of Microsoft to stump up a stake and put their money where their mouth is.

    It needs a serious reality distortion field to think that MS is going to disappear in the next thirty years, let alone the next three.

  20. Roy Schestowitz said,

    January 3, 2009 at 3:09 pm

    Gravatar

    Thirty years??? With this time frame in mind, you can’t even tell what nations might be failed (or nuked) and what form of commerce will prevails. It stuns me that you said 30 years.

  21. AlexH said,

    January 3, 2009 at 3:10 pm

    Gravatar

    I think if you look back even a hundred years you’ll find very few countries have failed.

  22. Rene Levesque said,

    January 3, 2009 at 3:55 pm

    Gravatar

    >It’ll be interesting if the Obama administration shuts out the >bullshitters from Halliburton, Bechtel, Microsoft, etc

    Oh for pete’s sake!!
    What exactly makes you think that Obama wont be business as usual?
    I say that Biden/Billary indicates that nothing has changed but the level of bullshit control has. The same people are back in power, the same moneymen calling the shots, the same military-industrial backers in place.. and a hawk as Barry’s right hand man. Within 48hrs, Obama was visiting the kingmakers of the jewish lobbby and blasting rhetoric just like Bush yet my hippie friends still believe it willbe diffierent. The dude is anti-gay marriage and will have an outspoken religious dude at his coronation yet the gays still treat him as a savior.

    Politics is the art of illusion and wanting to believe.

    THe last democrats where more corrupt that the idiots Bushies, bombed more countries, carried illegal wars and were demononstrated against just as much. In eight years, well all forget about Bush 1 and 2 and elect the reps again.

    Nothing has changed but a black man is now in power.
    After seeing Colin Powell and Condy Rice, I can tell you that just because its a brotha in power. things wont change.
    But after seeing the US TWICE vote for this current idiot, voting for a chameleon who gives the impression of change makes you feel better about yourself and your country. I was in europe in ’99 and we were hated before Bush came to power. The 40+ countries we have invaded/bombed since WW2 is pretty much a testament to that.

    Barry will bomb as many people and will have another Madeleine Halfbright to tell us that “500,000 dead iraqui kids could have been worth it had we caught Saddam.” But at least when the democrats kill in your name, you’ll feel good about it.

    You might not like the analogy but the US is like Microsoft.

  23. Thomas said,

    January 6, 2009 at 12:55 pm

    Gravatar

    Microsoft Terminating employee’s to save on severance and press release “layoff”
    Microsoft is on a witch hunt to fire employees!

    Staffing went from 10,000 positions open to 1000
    (each HR person can now fill one position). There is a hiring freeze!!! But MS press

    CSS is evaluating Team Mgr’s that have been in their level for 30 months to evaluate how to
    trim Team Mgr.

    Human Resources is pulling reports to see anyone who has “violated policies” this will assist
    in a terminations rather than a lay off and severance.

    9 years in HR at Microsoft and it finally happen to me.

  24. The Mad Hatter said,

    January 6, 2009 at 8:46 pm

    Gravatar

    @Thomas

    Sorry to hear it. Good luck on the job hunt.

  25. Roy Schestowitz said,

    January 6, 2009 at 9:07 pm

    Gravatar

    IBM is said to be preparing to sack a similar number (16k).

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