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Job cuts enroute for Microsoft, other tech industry giants


Some of tech's biggest and and normally safest players, including Microsoft, IBM, Intel, Sony, and Google, are trimming their workforces in a bid to lower costs and stave off a harsh economy.

Microsoft downsizes 5,000 jobs

Seattle-based Microsoft announced it will cut 5,000 jobs over the next 18 months, starting with 1,400 today.

The staff change is the first round of major layoffs in the company's almost 35-year history and comes after a disappointing quarter where its revenue grew just 2 percent year-over-year but it reported an 8 percent loss in the client division that handles its staple Office and Windows software.

"In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business," chief executive Steve Ballmer wrote to employees in a now public memo obtained by All Things Digital.  "We must make adjustments to ensure that our investments are tightly aligned with current and future revenue opportunities.  The current environment requires that we continue to increase our efficiency."

Microsoft will eliminate "up to" 5,000 positions in research and development, marketing, sales, finance, legal and corporate affairs, human resources, and the information technology departments, according to the memo.  Ballmer explains that new positions will "support key investment areas during this same period of time" for a net decline in staff of 2,000 to 3,000 over the next 18 months.

Ballmer also mentioned plans to cut travel expenditures by 20 percent and reduce spending on vendors and "contingent" staff.

Microsoft will offer job services to those laid off, some of whom will find jobs elsewhere within the company.  The rest will receive severance pay and other benefits.

"The decision to eliminate jobs is a very difficult one," Ballmer wrote in the memo.  "Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company's cost structure so that we have the resources to drive future profitable growth."

IBM cuts as many as 16,000

Meanwhile, the website of IBM's unionized workforce is awash with comments from workers who say they were the victims of layoffs at the tech giant.

Alliance@IBM is predicting as many as 16,000 job cuts based on postings from employees at its site.

An IBM spokesperson confirms that cuts are taking place, but doesn't give any exact figures.  If the 16,000 figure is correct, the action would represent 4 percent of the company's 400,000 worldwide workforce.

The news comes despite higher-than-expected fourth-quarter earnings, sending the stock up 11.5% yesterday.

IBM is best known among Mac users for supplying G3 and G5 processors in PowerPC-based Macs but currently focuses its semiconductor efforts on specialized systems, including the PlayStation 3 and Xbox 360.

Intel releases 5,000, closes five plants

Just before Intel is expected to report its first quarterly loss in 22 years, the Santa Clara-based company has announced 5,000 job cuts as well as closures of five plants using older manufacturing processes than the 45 nanometer technique used for nearly all of its current lineup.

Two of the plants are in the US and are located at Santa Clara, California as well as Hillsboro, Oregon. Abroad, two of the shuttered plants are located in Penang, Malaysia while one is found in Cavite, Philippines.

In a prepared statement, the computer chip maker said the plant closings and related support function changes are expected to affect "between 5,000 and 6,000" workers.

As many as 1,000 of those workers could be offered positions at other facilities.  About 400 employees in the San Francisco Bay Area will be affected as a result.

Of Apple's current lineup, only the Apple TV and Mac mini use chips made on 65 nanometer or larger manufacturing processes; it's unknown whether any of these are affected by the cuts.

Sony closes two factories, cuts 2,000 jobs

Sony says it will close two television factories and cut 2,000 jobs in Japan based on both a poor economy and a very strong yen, which boosts the costs of making its electronics relative to the prices for the goods sold abroad.

It comes as the company has confirmed it will post its first annual loss in 14 years and only the second in company history.

CNET believes this is one installment of Sony's existing cost reduction plan, announced last month, which is set to lay off 8,000 full-time employees and 8,000 more contractors by 2010.

Google cuts just 100

All these new cuts accompany earlier ones made by Google, which announced 100 eliminations among its recruiters last week and has often been regarded as one of the technology industry's most aggressiveh hirers. The Mountain View-based company approaches the cuts as a slowdown rather than a reduction of its total workforce.

"Google is still hiring but at a reduced rate," the company notes in its official blog.  "Given the state of the economy, we recognized that we needed fewer people focused on hiring."

Apple is considered one of Google's closest partners in the computer world and uses Google technology in its touchscreen devices as well as for special components of its iLife apps, such as iMovie uploads to YouTube.