03.01.09

Cutbacks at Microsoft, More Canceled Products Rumoured (Corrected)

Posted in Apple, Finance, Microsoft at 6:21 pm by Dr. Roy Schestowitz

Was: “Layoffs at Apple, Cutbacks at Microsoft, More Canceled Products Rumoured” (corrected to reflect on the age of the Apple article)

Commands to leave a function of reduction in business

Summary: Signs of the stagnating proprietary software business, as seen in Microsoft

THE LATEST NEWS about Novell brought to the discussion some Mac enthusiasts who perceive Apple as invincible (see BetaNews for details). This type of enthusiasm was short lived however. Apple is preparing for layoffs according to new reports [correction: this article is very old], so Microsoft's pains are not so unique now that countries like the UK are looking the other way (adoption of Free software and ODF).

LEAD: Apple Computer Inc. is expected to lay off 400 to 500 employees this week as part of an effort to control expenses, industry executives said. Apple’s growth has slowed, partly because of an industry slump and partly because its product line lacks competitive inexpensive personal computers.

In addition to this, according to an isolated report, Microsoft’s ESP platform is on the ropes right now, just like other services or divisions that Microsoft shut down.

Users of Microsoft’s 3D simulation platform have been rocked by news that the company has laid off off or reassigned most of the of the platform’s developers. However, Microsoft is refusing to comment on the future of the software.

A couple of days ago, reports began to surface where it’s suggested that a 10% pay cut for temporary Microsoft employees is on its way. The only news arriving since then is that it’s confirmed and Microsoft workers are protesting.

Microsoft may have just accomplished what the WashTech labor union tried to do for years — motivating its workers to band together and fight for their common interests. At least, that’s the aim of a new site called MSRateCuts.org, which objects to the pay cuts expected to result from Microsoft’s decision to reduce the rate it pays the agencies that provide many of its temporary workers.

This friendly protest is covered here as well. It did no good.

Temp giant Volt informs workers it will make Microsoft pay cuts

[...]

Volt Workforce Solutions, believed to be the largest provider of Microsoft temporary workers, informed them tonight that it will be cutting their pay by 10 percent as a result of the Redmond company’s decision to reduce the amount it pays employment firms. Volt joins most but not all of the other firms in deciding to pass some or all of the impact of the cuts on to their workers.

All the coverage above comes only from Seattle, which isn’t terribly helpful. Eternal bias from the Seattle press (even blind acceptance of corruption) can be explained by the impact of Microsoft’s demise on the local economy. Press coverage from there drips with agenda simply because of personal interests (selfishness), as opposed to motivation to inform.

Additional coverage (not from Seattle/Washington) can be found in:

• Microsoft Cuts Contractor Pay
• Microsoft temps get shorter hours
• Microsoft cuts temp workers’ pay
• Microsoft cuts temp worker rates 10 pct
• Microsoft Cuts Contract Staff Rates By 10% To Save Costs
• Microsoft Enacts 10 Percent Pay Cut For Temp Workers
• Microsoft reducing contractor pay rates, forcing 100-day breaks
• Microsoft Temps Get a Haircut
• Microsoft Trims Temp-Worker Expenses

From the Seattle P-I, which might be on its death throes:

• Microsoft staffing agency defends legality of pay cuts
• Microsoft temps face 10 percent pay cut

Many of these temporary workers may also be foreign, i.e. those who are in essence cheaper because they don’t receive benefits (no entitlement) and are not receiving any protection from workers’ unions/regulations. it’s the perfect prey for exploiters of labour — get but hardly give.

Regardless, Microsoft continues to be scrutinised [1, 2, 3, 4] for being the top user of H-1B visas, as reported by IDG:

Microsoft Corp. was the top U.S.-based recipient of H-1B visas in 2008, receiving approval for 1,037 visas, slightly more than in 2007.

BusinessWeek wrote about this too:

Indian Firms, Microsoft Top H-1B List

Critics say the data show that the H-1B visa program is dampening U.S. wages and facilitating outsourcing, a critical problem as the U.S. unemployment rate continues to climb.

Several months ago, BusinessWeek also wrote about H-1B visas "fraud".

Microsoft is not only the #1 company when it comes to these shady practices. It is also the #1 lobbyist in its area, which is nothing to be proud of. In fact, corruption disguised as "lobbying" is how Microsoft obtained those allocations of H-1B visas in the first place, so there is a direct connection between the two activities.

Last but not least, the weakness of Microsoft is showing. Reuters reports on the stock’s fairly rapid decline.

Microsoft says no new cost cuts, shares hit 11-year low

[..]

Microsoft Corp outlined plans to offset revenue declines as the PC market shifts to low-cost netbooks, but it failed to announce more cost cuts, sending its shares to an 11-year low.

That’s despite massive buybacks.

Even pro-Microsoft sites like Barron’s were unable to withhold the evidence.

Bellini writes that the company is not likely to take further expense reduction moves – the company basically said exactly that at the meeting yesterday – and adds that “Microsoft is braced for further deterioration of the macro environment but plans to invest in its products to realize leverage once the market turns around.”

Microsoft is not so accustomed to having its estimates cut or the stock downgraded. For many years it has been faking infinite wealth when it reality it may have lost billions. There is a lot more to be said about Microsoft's financial situation. The party was over a long time ago. █

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