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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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May 6, 2009 6:11 PM

Products affected by latest Microsoft layoffs

Posted by Sharon Chan

We're getting some more details about products that are being affected by the latest Microsoft layoffs. They include: Massive, the game advertising firm Microsoft had acquired; Response Point, the small-business voice over IP service; and .NET Micro Framework, the development platform for creating services for small devices.

Massive's staff will be reduced 28 percent, according to a statement from the company.

The company will continue to support Response Point 1.0 but is evaluating what it's going to do with the next version, the statement said.

The business model for the .NET Micro Framework is changing. The company will eliminate royalties from the distribution of the product, and it will now be a community-supported product. The source code will be made available to customers and the community.

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May 5, 2009 6:45 PM

BTW, Windows 7 release candidate now available

Posted by Sharon Chan

taskbar_peek_web.jpg A second wave of layoffs at Microsoft was announced today, including 1,200 cuts locally, Cinco de Mayo and...oh yeah...the Windows 7 release candidate is available publicly.

Get your hot, freshly brewed release candidate here.

The release candidate is the final testing version of the software before Microsoft ships it to computer makers to install on new PCs for sale.

To the right you can check out the new task bar and the icon-free desktop, except for the recycling bin. As you roll your mouse over the task bar at the bottom, you get a sneak preview of what's open in each application.

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May 5, 2009 2:46 PM

Advice from Microsoft worker laid off in January on how to find next job

Posted by Sharon Chan

So you've been laid off from Microsoft and you're wondering what you're going to do next. I just spoke to Noel Paterson, a program manager who was laid off from Microsoft's Games group in January after three years at the company.

Paterson said that on Jan. 22 he was pulled into a conference room with about 15 people and told they were all being let go. His director talked, then the human resources people gave each a packet of information about a severance package and career assistance. Then they told him to go home and talk to family, and he came back the next day to pick up his stuff and tie up any loose ends.

Paterson started the Facebook group The Microsoft 1400 to support other people who were laid off in January. He has since found a new job at GameHouse Studios. Here's his advice on how to get on with your life and find a new job:

Continue reading this post ...


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May 5, 2009 7:22 AM

More layoffs at Microsoft today, says company e-mail from Steve Ballmer

Posted by Sharon Chan

Update 10:37 a.m.: Today's layoffs at Microsoft will affect about 1,200 positions in Washington state, according to the state's Employment Security department.

Communications director Sheryl Hutchison said the Microsoft has not yet filed a Worker Adjustment and Retraining Notification with the department but has indicated that it will. In January, Microsoft filed a WARN notice for 872 positions, and recently filed a notice in April saying it was eliminating two positions. Microsoft declined to say how many employees would be affected locally, saying only that half would be in the U.S. and half would be international. (Update 11:44 a.m.: Microsoft, through a spokeswoman, later confirmed the 1,200 number.)

Depending on the size of the layoffs, federal law requires companies to notify workers 60 days prior to closures and job cuts.

Update 9:35 a.m.: Here is the official company statement on the layoffs. It says little more than Ballmer's e-mail.

"As part of the plan we announced in January to reduce costs and increase efficiencies, today we are eliminating additional positions across several areas of the company. While job eliminations are always difficult, we are taking these necessary actions in response to the global economic downturn."

The company declined to say whether specific departments have been cut. There are some comments at the anonymous employee blog Mini Microsoft that indicate cuts are coming from the sales marketing and services group, advertising and MSIT, but these are unconfirmed.

7:22 a.m.: Microsoft will be making its second round of job cuts today as part of the 5,000 layoffs the software company announced in January, according to a Microsoft spokesperson. In January, the company eliminated 1,400 out of the 5,000 cuts planned. It was the first major layoff in the company's history.

This new round of cuts appears likely to involve the other 3,600 jobs that the company intended to eliminate, although a spokesperson declined to comment on an exact number. Half of the cuts will be made in the U.S., half will be made internationally. The spokesperson also declined to comment on how many cuts would be made locally.

A spokesperson said the company remains committed to creating 2,000 to 3,000 jobs between now and July 2010.

Below is an e-mail provided by a company source that Chief Executive Steve Ballmer sent to all employees this morning.

In January, in response to the global economic downturn, I announced our plan to adjust the company's cost structure through spending reductions and job eliminations. Today, we are implementing the second phase of this plan.

This is difficult news to share. Because our success at Microsoft has always been the direct result of the talent, hard work, and commitment of our people, eliminating positions is hard.

Today's action includes positions in the United States and in a number of countries around the world. In the U.S., affected employees will be notified directly by their managers today. In other countries, local leadership teams will provide more specific information about the impact to their organizations.

With this announcement, we are mostly but not all done with the planned 5,000 job eliminations by June 2010. We are moving quickly to reach this target in response to consistent feedback from our people and business groups that it's important to make decisions and reduce uncertainty for employees as quickly as possible, and so that organizations can concentrate their efforts and resources on strategic objectives.

As we move forward, we will continue to closely monitor the impact of the economic downturn on the company and if necessary, take further actions on our cost structure including additional job eliminations.

For those of you directly affected by today's announcement, I want to thank you for your contribution to Microsoft and assure you that we will continue to provide support as we did during the previous job eliminations.

And for everyone across the company, I want to reemphasize how much I appreciate the way you have pulled together to help the company respond to this difficult economic environment. There's no doubt that these are very challenging times. But together, we are making the right choices to ensure that we will continue to deliver great products and position ourselves for strong future growth and profitability.

Thank you for your continued hard work, commitment, and focus.

Steve

If you want to share any information about what's happening in Redmond today, e-mail me at schan@seattletimes.com or call me at 206-464-2958.


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April 20, 2009 12:56 PM

Analyst: More layoffs at Microsoft possible

Posted by Sharon Chan

Sid Parakh, analyst at McAdams Wright Ragen, released a report today ahead of Microsoft's earnings report saying that Microsoft could be considering job cuts beyond the 5,000 announced in January.

"As a likely consequence of tougher business conditions, our checks indicate that Microsoft may embark on another round of restructuring in the near future," Parakh wrote. He said he did not have details on size, time frame, location, business units, timing or whether it would affect outside contractors.

He also said he expects earnings results to be lower than previously projected, although the company did not provide financial guidance in the last call.

It would be a change in tone from what the company was saying as recently as a week ago, when head legal counsel Brad Smith said at an Elevate America news conference, "There have been no changes in outlook going forward" regarding layoffs.

The company still plans to cut 5,000 total jobs through 2010, including the 1,400 announced in January. Smith also said the company still plans to create 2,000 new jobs in that period.

The third-quarter earnings report is scheduled for Thursday.

Update 3:14 p.m.: I reached Microsoft spokesman Lou Gellos, who sent over this statement: "As we said in January, we will continue to assess the market and economic situation over the next 18 months and make adjustments as needed. Beyond that, we have no other details to share."

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April 13, 2009 12:48 PM

Free Microsoft software training for 30,000 in Washington state

Posted by Sharon Chan

Microsoft will offer 30,000 vouchers for free software training to help people in Washington get learn how to use Microsoft software.

Gov. Chris Gregoire and Microsoft General Counsel Brad Smith made the announcement this morning at a press conference at the YWCA Opportunity Place in downtown Seattle. Microsoft first announced its job training program, Elevate America, in February and Washington is the first state to roll it out.

"We have thought long and hard about how do we come out of this deep recession stronger and better prepared for the 21st century," Gregoire said.

Both employed or unemployed people are eligible for the vouchers, which can be used to take online courses, worth $100 to $300, or certification testing, which is worth $85. Click here to sign up between now and May.

Vouchers expire in July. People will need an Internet-connected computer to access the training. People without computers can get access to one at centers such as the YWCA's Opportunity Place.

"It will help people who are unemployed get skills needed to get their next job, and it will help people employed to keep their jobs and get the skills they need," Smith said. He estimated the economic value of the vouchers at $3 million at the low end.

In separate news, Smith declined to comment on reports that Microsoft and Yahoo are talking about a search partnership.

He also said there has been no change in outlook on layoffs at Microsoft. The company still plans to cut 5,000 total jobs through 2010, including the 1,400 announced in January. Smith also said the company still plans to create 2,000 new jobs in that period.

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March 23, 2009 4:52 PM

Microsoft's January layoffs took effect today

Posted by Benjamin J. Romano

Today, March 23, marks the last day on the payroll for Microsoft employees notified in January that their jobs were being cut. "They will receive their severance payout, additional pay for healthcare costs, and will continue to be eligible to use outplacement services for a defined period of time," a company spokeswoman said via e-mail.

The company cut 1,400 full-time jobs, including 872 locally, in its first broad layoffs, announced Jan. 22. The cuts are part of a broader cost-savings plan that could result in 5,000 job cuts over an 18-month period, leaving up to 3,600 additional positions still to be cut to reach that total.

Some individuals have reported being laid off since the initial announcement. It's not clear whether the company will let people go in dribs and drabs or make another large layoff announcement. Microsoft wouldn't comment on this today.

"As we said in January, we will continue to assess the market and economic situation over the next 18 months and make adjustments as needed," the spoksewoman said. "Beyond that, we have no other details to share."

The uncertainty created by the looming additional job cuts bothered some Microsoft employees when the plan was first announced. At the time, they said they wished the company had done all the cuts at once to get it over with.

Even as it cuts jobs, Microsoft is also hiring in strategically important areas such as Internet search, and plans to add up to 2,000 to 3,000 jobs even as it makes cuts, for a net loss of 2,000 to 3,000 jobs.

As of January 31, Microsoft had 95,943 employees globally, 41,555 of whom were employed in the Puget Sound area.

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March 3, 2009 6:01 PM

Microsoft vendors and contingent workers total more than 79,000, on top of direct employees

Posted by Benjamin J. Romano

It's widely known that Microsoft has a large contingent work force in addition to its 96,000 direct, regular employees worldwide. But the company has never publicly quantified these workers, who typically work through third-party firms and do everything from mow the lawns to write software.

According to numbers reviewed by The Seattle Times, Microsoft has roughly 70,700 vendors, as well as 8,600 "other" workers worldwide. The "other" category includes mostly agency temps -- the so-called "a-" workers -- but also visiting researchers and interns.

The numbers come from HeadTrax, an internal application used to track human resources. It lists a total head count of more than 175,700 people who could be broadly described as earning some portion of their living through work for Microsoft. The figure does not appear to include the impact of 1,400 layoffs announced in January and set to take effect later this month as part of an 18-month plan to cut a net 2,000 to 3,000 full-time jobs.

Microsoft spokesman Lou Gellos said the numbers are "within the ballpark," but added that HeadTrax is essentially a "running barometer" for the company to keep a handle on things. He added that the vendor number "varies widely depending upon what's going on at any given time."

Vendors perform a range of functions of varying durations for the company through outside service providers. A landscaping company, for example, may get badges so that a crew of workers can come on campus to mow lawns. But even though the crew is included in the count of vendors, they might not work at Microsoft every day.

This can cause the vendor figure to appear artificially high, Gellos said.

Other functions performed by contingent staff, both vendors and agency temps, include staffing reception desks, driving the company's shuttles and Connector buses, writing technical documentation, providing security, moving offices, writing and testing software code, lending specific expertise to major projects and more.

The HeadTrax information did not indicate where the employees are located. Microsoft does report its local regular, work force. At the end of January it had about 41,555 in the Puget Sound region, about 43 percent of the total at that point.

Matt Rosoff, analyst with Kirkland-based independent research firm Directions on Microsoft, said the number of contract workers is not surprising, but is interesting to see quantified.

"We had always heard that Microsoft has about as many contract employees as it does full-time employees, so 70,000 [vendors] seems very reasonable to me," Rosoff said.

A segment of the contingent staff has been in the spotlight in recent days after Microsoft lowered by 10 percent the amount it pays U.S. third-party temporary agencies that place these workers in assignments at the company. Many of the temp agencies are passing a similar cut on to the contract employees. (The 10 percent cut, part of a broader Microsoft cost-cutting effort, has so far affected only the so-called "a-" agency temp workers, of whom there were recently about 7,200 worldwide.)

Rosoff said the total global head count figure, 175,700, may still miss some people at other companies that do most of their work for Microsoft.

"In the Seattle area, there are plenty of small development companies who are mostly dependent on Microsoft outsourcing work to them," Rosoff said. "Say an internal product group wants to build a SharePoint site and nobody has time to do it. That's the kind of thing they might outsource."

Microsoft's use of contingent workers matches the broader trend in the technology industry, said Eric Gregg, a managing partner at the Inavero Institute, a Portland firm that provides research on and for the staffing industry.

"It is no longer the case that companies view temporary and contract strategy as their 'contingent' workforce, but rather their flexible workforce," Gregg said via e-mail. "... In the technology space, this reliance on temporary and contract labor is even more pronounced than in many of the other sectors."

The HeadTrax numbers reveal that Microsoft is vying with Boeing in terms of global work force. On Feb. 28, the aerospace giant had 161,594 employees including subsidiaries and long-term contractors. It's difficult to make a direct comparison, however, because of the caveats for Microsoft's vendor work force mentioned above and different methodologies used by each company to count their various types of workers.

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March 3, 2009 10:28 AM

Microsoft responds to Sen. Grassley on layoffs, H-1Bs

Posted by Benjamin J. Romano

Microsoft this morning posted a letter to U.S. Sen. Chuck Grassley, R-Iowa, responding to his Jan. 23 request for information on the company's work force and plans in light of its first major layoffs. The lengthy letter, signed by General Counsel Brad Smith, repeats much of what Microsoft has said publicly -- layoffs will be centered in the Puget Sound, both U.S. citizens and immigrants are among those losing jobs -- but also includes several new nuggets. Read the whole letter here. I'll post a summary in a few minutes. [Update, 5:06 p.m.: Fixing link to the full letter and noting Grassley's response, in a statement to various news outlets: "I'm still left without much information about how Microsoft is ensuring American workers are being protected or specifics of its H-1B hiring practices. I'm interested in learning more details."]

Update, 10:47 a.m.: Microsoft plans to keep proportion of H-1Bs stable after layoffs. Read on for more details.

Continue reading this post ...


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March 2, 2009 10:55 PM

Who is Phil Palios, organizer of the Microsoft contract worker protest?

Posted by Benjamin J. Romano


DEAN RUTZ / THE SEATTLE TIMES

Phil Palios holds a hastily made sign while protesting a 10 percent rate cut for Microsoft temporary workers. The Redmond native who has always wanted to work at Microsoft organized a protest Monday night that drew about two dozen temporary workers.

Phil Palios grew up in Redmond watching Microsoft grow. It's where he always wanted to work. He was glad to have the opportunity to get a foot in the door as a contractor. But he became disillusioned with the size of the company today and the way it treats its workers, particularly those who are hired through third-party employment agencies. When his employer, Volt, passed on the news Friday that all contractors would have to take a 10 percent pay cut -- for him it would mean going from $34.25 an hour to about $30.83 -- Palios had had enough.

"I had no intention of accepting a 10 percent pay cut," Palios said in an interview Monday afternoon at Victor's Coffee in downtown Redmond, before attending a rare, albeit small, labor protest at Microsoft that evening. "So I viewed it as, I am not going to accept this pay cut. They might let me go sooner. I might get black-listed or something, but I wanted to at least act and make my voice heard and try to unite the workers and have them realize that if they form an alliance -- it doesn't have to be a union, if they just work together -- they can have a lot more power and open up communication channels with the company."

Continue reading this post ...


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February 26, 2009 5:55 AM

Microsoft temps face 10 percent pay cut

Posted by Benjamin J. Romano

The thousands of contractors who work at Microsoft through third-party agencies are facing pay cuts beginning Monday, as Microsoft continues to look for ways to cut costs.

Microsoft and its contracting agencies agreed to a 10 percent cut in the bill rate, impacting all temporary worker assignments. Several contract employees have said the reduction is being passed on to them in the form of a pay cut. One person said some agencies are seeking to pass deeper pay cuts onto their workers. Several contractors contacted The Seattle Times, asking for anonymity for fear that speaking out would jeopardize their jobs.

The 10 percent cut is for existing contracts. New contracts will have a 15 percent reduction in the rate.

The cuts are not a complete surprise, as Microsoft had been trimming its contract work force even before it announced layoffs of 1,400 full-time employees Jan. 22 -- the first major job reduction in company history. At that time, the company also said it intended to cut spending on contractors by up to 15 percent.

Another contractor said the cuts impact so-called "a-dash" employees, also known as contingent staff. It's not immediately clear if "v-dash" employees, who are vendors, are facing similar cuts.

Notification of some contract employees began Tuesday. Microsoft does not disclose how many contractors it employs. These workers staff reception desks, test software, provide specialized consulting services and perform other functions that keep the company running through outside agencies. Sid Parakh, analyst at McAdams Wright Ragen, has estimated the figure to be around 40,000.

Continue reading this post ...


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February 24, 2009 6:15 AM

Microsoft Strategic Update: Ballmer tells Wall Street more dramatic cost cutting would be 'imprudent'

Posted by Benjamin J. Romano

With Microsoft's Redmond campus largely emptied out for the winter holidays, CEO Steve Ballmer crunched the numbers on the proper level of spending for his company against the current economic climate, which he has repeatedly referred to as a "reset" rather than just a recession. Ballmer said his own estimates for the weakness and duration of the downturn tend to be more severe than those of other business leaders he meets.

With that in mind, he settled on $27.5 billion of operating expenses -- a level the company aims to hold relatively steady through the current fiscal year, which ends June 30, and during its 2010 fiscal year. Ballmer made clear to financial analysts meeting in New York this morning for the company's annual strategic update that cutting back even more significantly -- say to $20 billion -- would be "imprudent."

"I think this is right," Ballmer said.

That should give some comfort to those wondering if the modest layoffs Microsoft announced last month were the beginning of a more significant reduction. Wall Street analysts and investors are pressuring companies in every industry to continue cutting costs as sales and profits slow dramatically.

The strategic update call just came to an end. Ballmer gave a detailed look at seven major business areas for the company. Check back here later this morning for more details.

Update, 7:50 a.m.: As he told Congressional Democrats earlier this month, Ballmer said Microsoft's corporate strategists have been evaluating past downturns -- particularly those driven by "deleveraging." The team read company annual reports from 1927 to 1938 to determine who did a good job managing through the Great Depression. "RCA, God rest them in peace, became our role model," Ballmer said. The company was able to dominate the television business because it continued to invest during bad times, he said.

Then he broke down how Microsoft plans to invest.

Continue reading this post ...


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February 23, 2009 3:12 PM

Microsoft lets 25 laid-off employees keep severance overpayment

Posted by Benjamin J. Romano

monopoly.jpg

After asking 25 laid-off Microsoft employees to return an overpayment of severance benefits, Microsoft's top human resources executive decided to let them keep the money. Calling it a "unique circumstance," Lisa Brummel, senior vice president of human resources, said the employees will not have to repay the overpayment, which ranged from a couple hundred dollars to over $5,000, but averaged about $4,000 to $5,000 across the 25 employees. [Parker Brothers Monopoly card via Bankrate.com]

An additional 20 laid-off employees were underpaid severance. They will receive received checks making up the correct amount.

All 45 individuals are part of the group of 1,400 people notified of layoffs on Jan. 22.

Updated, 3:55 p.m.: Brummel did a round of interviews this afternoon in a bid to quickly put to rest an issue that has drawn negative attention to the company's handling of the layoffs. TechCrunch broke the story on Saturday, posting a letter from Microsoft to a laid-off employee seeking repayment of the extra severance. Other media picked it up over the weekend and today.

She said the issue came to her attention through "internal channels."

"This was brought to my attention just recently in the past two days that we had done this and I said, 'You know, this is a unique population. This is a unique circumstance. I think our normal course of business action is the wrong one to take in this case. We should in fact not pursue repayment from those employees and I am going to call each of them personally and let them know that, which I have done,'" she said.

"I can tell you universally they were quite happy," Brummel said. "I just felt like it was--- this is a unique circumstance where normal course of business doesn't really apply."

Asked if the attention the story was getting played into her decision to let the laid-off employees keep the extra severance, Brummel said, "Honestly, I didn't see any of the media coverage." She said she reads the papers but was "more interested in the Seattle Opera review today than anything else."

The severance payment errors were due to a "clerical mistake on our end," she said.

Severance benefits varied by country. Most U.S. employees were eligible for at least 60 days of pay, and additional severance based on tenure and level.

What do you think of Microsoft's decision?

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February 20, 2009 4:43 PM

Microsoft employment increased slightly in January; layoffs to be reflected in later figures

Posted by Benjamin J. Romano

Microsoft released local and worldwide employment figures for January, showing that it brought hiring to a near-halt last month as it announced companywide layoffs for the first time.

Worldwide, Microsoft added 115 employees in January, bringing its global full-time work force to 95,943. That's an increase of about one-tenth of a percent from Dec. 31.

The majority of the staff it brought on -- 75 people -- were in the Puget Sound region, where it had 41,555 at the end of January, up about two-tenths of a percent.

The figures don't reflect the layoffs Microsoft announced Jan. 23. The company notified 1,400 people that day, 872 of them in the Puget Sound area. Many were given 60-days notice, so the layoffs will likely show up in March figures. The company also announced plans last month to trim up to another 3,600 positions over 18 months, while also hiring 2,000 to 3,000 people in specific areas.

And, in fact, the company has continued to post job openings on its career site.

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February 6, 2009 9:44 AM

Microsoft digital ad shop Razorfish lays off 70 in Seattle, Portland, SF and LA

Posted by Benjamin J. Romano

Razorfish, the digital advertising agency that Microsoft gained when it acquired aQuantive in 2007, is going through another round of layoffs. A spokeswoman confirmed that the company laid off about 70 people on Thursday on the West Coast, including its Seattle headquarters and offices in Portland, San Francisco and Los Angeles.

Continue reading this post ...


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February 2, 2009 6:12 AM

Microsoft lobbied Obama transition team on high-skilled immigration weeks before announcing layoffs

Posted by Benjamin J. Romano

Microsoft urged the government to "remove caps that bar entry into the U.S. by high-skilled immigrants," about three weeks before announcing its first companywide layoff, according to a report in BusinessWeek.

The request, part of a policy brief written in June 2008 and posted to the Obama-Biden Transition Project Web site in early January, does not represent a new stance for the company, which has long lobbied for changes in U.S. immigration policy around high-skilled workers. But its posting on the new administration's transition Web site came at a sensitive time, against the backdrop of layoffs -- which hit a "significant number" of guest workers at the company -- and pressure on Microsoft by Sen. Chuck Grassley to retain U.S. citizens over similarly qualified guest workers.

The Obama Administration's transition Web site is no longer active, but here's a PDF (2 pages) of the brief, which also asks for changes in the student visa policy to encourage foreign students educated here to stay and an increase in green cards.

Continue reading this post ...


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January 29, 2009 5:18 PM

Microsoft has posted 72 job openings in Washington since layoffs announced

Posted by Benjamin J. Romano

A week ago, Microsoft announced its first companywide layoff, letting go 1,400 people as part of a plan to cut up to 5,000 jobs in the next 18 months. But the company made clear it would continue hiring, perhaps 2,000 to 3,000 people, in strategically important areas. And judging by its U.S. online jobs site, it intends to. A search of the site for positions in Washington state brought back 72 openings posted since Jan. 22, the day the layoffs were announced.

Continue reading this post ...


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January 27, 2009 11:49 AM

Microsoft layoffs have minimal impact in China; no immediate cuts in India

Posted by Benjamin J. Romano

Roughly 40 percent of Microsoft's 96,000 employees work outside the United States. The company has subsidiaries in countries from Albania to Zimbabwe. How are the layoffs announced last week impacting Microsoft's employees around the globe?

It's hard to say exactly. The company is "not sharing specific figures that break out US vs. outside of the US," a spokeswoman said via e-mail. But she did confirm earlier reports that Microsoft's India operations had no layoffs during the initial round of cuts that came down Thursday. China, another important research and development hub for the company, was "minimally impacted." The company declined to provide employment numbers for its India and China operations.

Continue reading this post ...


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January 23, 2009 2:53 PM

Senator wants Microsoft to preserve American jobs over those of foreign guest workers

Posted by Benjamin J. Romano

Update after the jump.

U.S. Sen. Chuck Grassley, R-Iowa, sent a letter to Microsoft CEO Steve Ballmer Thursday expressing concern over how the company may go about its layoffs.

"I am concerned that Microsoft will be retaining foreign guest workers rather than similarly qualified American employees when it implements its layoff plan," Grassley said in the letter, posted to his Web site.

The company announced plans to cut a net 2,000 to 3,000 jobs Thursday, its first companywide layoff.

Continue reading this post ...


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January 23, 2009 10:27 AM

Is Microsoft Flight Simulator coming to an end?

Posted by Benjamin J. Romano


MICROSOFT

A screenshot of Microsoft "Flight Simulator X" depicting a float plan and the Seattle downtown skyline.

[Update, 11:39 a.m.: Microsoft is indeed closing Aces Studio, maker of one of its longest-running products, Flight Simulator, a Microsoft spokesman confirmed.

"Following our annual strategy review process, [the Interactive Entertainment Business] is making adjustments within our business to align our people against our highest priorities, and the closure of Aces is once of those changes," he said via e-mail.

Fewer details on the future of Flight Simulator.

"All we're announcing at this time is that we are committed to flying games," he continued.]

Game industry news site Gamasutra reports that ACES, the Microsoft game studio responsible for its iconic "Flight Simulator" program, was "heavily affected" by the company's first widespread layoffs. I've asked a Microsoft spokeswoman to comment and will update as appropriate.

Continue reading this post ...


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January 22, 2009 8:39 PM

Severance and benefits for laid off Microsoft employees

Posted by Benjamin J. Romano

Microsoft is trying to ease the blow of layoffs to 1,400 people who were notified today. Their job responsibilities end Friday and, according to a WARN notice filed with the state, their layoff will be official on March 23. "The adjustments announced today impact Microsoft's global operations, so employee Notification and the last day for individuals outside of the US will vary based on local laws," a spokeswoman said in an e-mail.

Continue reading this post ...


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January 22, 2009 8:14 PM

Confusion for Microsoft employees who weren't laid off today

Posted by Benjamin J. Romano

Some Microsoft employees complained that the company did a poor job of sending the all-clear signal to those who weren't affected by today's layoffs. After a companywide e-mail from CEO Steve Ballmer went out this morning at 6:07 informing employees of the job cuts -- 1,400 of which took place today -- other executives followed up with e-mails telling their reports whether cuts would take place in their organization.

Some people heard that, yes, there would be cuts -- but that was all they heard. "There was no communication that I still have a job," said one person, who later learned that those who were let go Thursday were notified directly. By the afternoon, if you were still there, you were fine, this person said, but that didn't stop a day of jokes about whether badges used to open doors on campus were still working.

Others complained about the huge window of insecurity hanging over Microsoft employees heads. The company plans to shed up to 3,600 additional positions in the next 18 months. Several people expressed that they wish the company had done it all at once, to get it over with.

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January 22, 2009 8:03 PM

Microsoft maintaining status quo on corporate giving despite cost cuts

Posted by Benjamin J. Romano

Cross posting from an item from my colleague Kristi Heim's new blog, The Business of Giving:

Microsoft plans to continue the same level of community giving despite a severe economic downturn and the first layoffs in its history.

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January 22, 2009 2:11 PM

872 local Microsoft jobs gone in first wave of cuts, 2 percent of local work force

Posted by Benjamin J. Romano

Microsoft released more specific figures on its local work force and how they will be affected by the first company-wide layoffs. A spokesman confirmed that 872 local jobs were cut, part of 1,400 positions gone today across the company. It's not clear yet how up to 3,600 additional job cuts -- for a total of up to 5,000 -- will fall as they're made over the next 18 months. (Microsoft also plans to add 2,000 to 3,000 positions, so the net job losses will be smaller.)

As of Dec. 31, Microsoft had 41,480 full-time employees locally, up 1.6 percent from the 40,797 full-time workers the company had here on Sept. 30, 2008. The 872 job cuts represent 2.1 percent of Microsoft;s local full-time work force.

Globally, Microsoft put the brakes on hiring in the latter months of 2008, particularly in December as it watched the economy deteriorate more rapidly. The company added only 164 positions that month, bringing its global staff to 95,828.

There are many thousands more who work for Microsoft indirectly as contractors and vendors. Microsoft does not provide numbers for its contract staff, but analyst Sid Parakh at McAdams Wright Ragen said he estimates the figure to be between 40,000 to 60,000. Microsoft said it will cut spending on contractors by up to 15 percent, on top of the full-time job cuts.

More coverage of Microsoft's cost-cutting

Microsoft laying off 1,400 today, up to 5,000 in next 18 months

Ballmer's e-mail to employees
Majority of cuts to be in Redmond; total reduction is roughly 3 percent
Contractor spending could be cut up to 15 percent
Attention turns to what groups will see cuts
Gregoire calls layoffs "disheartening"

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January 22, 2009 10:12 AM

Gov. Gregoire calls Microsoft layoff 'disheartening'

Posted by Benjamin J. Romano

Washington Gov. Christine Gregoire used Microsoft's layoffs today to push her state jobs initiative. Gregoire issued the following statement:

"It is disheartening that one of Washington's premier businesses is reducing its work force. Unfortunately, it is another indication that the national economic recession is deepening.

Continue reading this post ...


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January 22, 2009 9:36 AM

Microsoft layoffs: What about the contractors? Contractor spending could be down 15 percent

Posted by Benjamin J. Romano

Several people have asked how Microsoft's cost-cutting plans will affect the thousands of contractors who work for the company doing everything from staffing reception desks to testing software. As early as December, we knew that Microsoft was cutting short some contracts.

"We have plans to significantly reduce our vendor and contingent staff expenses," Chief Financial Officer Chris Liddell told Wall Street analysts on a conference call this morning.

The company will not put a specific number -- in terms of people -- on the contractor cuts and it rarely discloses the number of contractors it uses. A spokeswoman declined to do so today.

Liddell did say he expects spending on contractors to decrease about 15 percent.

"External contractors, we think about more in terms of the dollars that we spend overall. That's on top of the numbers we're talking about, and that could be down up to 15 percent," he said.

More coverage of Microsoft's cost-cutting

Microsoft laying off 1,400 today, up to 5,000 in next 18 months

Ballmer's e-mail to employees
Majority of cuts to be in Redmond; total reduction is roughly 3 percent
Attention turns to what groups will see cuts
Gregoire calls layoffs "disheartening"


Comments | Category: Microsoft layoffs |Permalink | Digg Digg | Newsvine Newsvine

January 22, 2009 9:23 AM

Speculation now turns to where, specifically, Microsoft will cut

Posted by Benjamin J. Romano

As Microsoft employees are digesting news of the first company-wide layoff, speculation is centering now on where, specifically, the cuts will fall.

Satya Nadella, has sent an e-mail to his organization saying there will be cuts in the Online Services Business, a source tells me.

On the Mini-Microsoft blog, the company's unofficial virtual union hall, anonymous comments are streaming in with details -- to be taken with a grain of salt -- on what groups have been notified of major cuts, and what groups have been told they're in the clear.

Mary Jo Foley reports that her sources are saying "the Entertainment and Devices (E&D) unit -- the group that is responsible for Xbox, Zune and Windows Mobile -- is being hit with the bulk of the immediate 1,400-person cuts."

A spokeswoman told me this morning that the majority of the 1,400 cuts today will be in Redmond.

More coverage of Microsoft's cost-cutting

Microsoft laying off 1,400 today, up to 5,000 in next 18 months

Ballmer's e-mail to employees
Majority of cuts to be in Redmond; total reduction is roughly 3 percent
Contractor spending could be cut up to 15 percent
Gregoire calls layoffs "disheartening"


Comments | Category: Microsoft layoffs |Permalink | Digg Digg | Newsvine Newsvine

January 22, 2009 7:22 AM

Majority of today's Microsoft job cuts to be in Redmond; total reduction is roughly 3 percent

Posted by Benjamin J. Romano

A Microsoft spokeswoman confirmed via e-mail this morning that "the majority" of the 1,400 job cuts Microsoft is announcing today are in Redmond, "consistent with the high concentration of employees based at our headquarters in the Puget Sound area."

Beyond that initial blow, the company's broader layoff plan is rather modest. It plans to cut up to 5,000 positions over 18 months while adding new staff for a net reduction of 2,000 to 3,000 jobs. The company now has roughly 96,000 employees the world over, the spokeswoman said, meaning at the high end, this is a net reduction of 3.1 percent.

In 2007, Microsoft CEO said the company's normal rate of attrition is about 8 percent a year. Of that, he said, about 3 percent is "good attrition" -- meaning low-performing workers who leave or are nudged out. Naturally, attrition rates tend to slow during bad economic times as people hang on to their jobs, but the bottom line is Microsoft is reducing its work force by roughly the rate at which its low-performing workers leave the company anyway.

More coverage of Microsoft's cost-cutting

Microsoft laying off 1,400 today, up to 5,000 in next 18 months

Ballmer's e-mail to employees
Contractor spending could be cut up to 15 percent
Attention turns to what groups will see cuts
Gregoire calls layoffs "disheartening"


Comments | Category: Microsoft layoffs |Permalink | Digg Digg | Newsvine Newsvine

January 22, 2009 6:43 AM

Microsoft CEO Steve Ballmer explains job cuts to employees

Posted by Benjamin J. Romano

In an e-mail sent to employees and released to reporters this morning, Microsoft CEO Steve Ballmer explained the company's first company-wide layoffs. Of note, while Microsoft is eliminating 5,000 positions over the next 18 months -- in addition to already ongoing cuts to contractor and vendor services, and other expenses -- Ballmer said the company will also "open new positions to support key investment areas during this same period of time" meaning that the net decline of headcount will be between 2,000 and 3,000 jobs or roughly 3 percent of its global employee base.

More coverage of Microsoft's cost-cutting

Microsoft laying off 1,400 today, up to 5,000 in next 18 months

Majority of cuts to be in Redmond; total reduction is roughly 3 percent
Contractor spending could be cut up to 15 percent
Attention turns to what groups will see cuts
Gregoire calls layoffs "disheartening"

Here's Ballmer's e-mail:

From: Steve Ballmer

Sent: Thursday, January 22, 2009 6:07 AM
To: Microsoft - All Employees (QBDG)
Subject: Realigning Resources and Reducing Costs

In response to the realities of a deteriorating economy, we're taking important steps to realign Microsoft's business. I want to tell you about what we're doing and why.

Today we announced second quarter revenue of $16.6 billion. This number is an increase of just 2 percent compared with the second quarter of last year and it is approximately $900 million below our earlier expectations.

The fact that we are growing at all during the worst recession in two generations reflects our strong business fundamentals and is a testament to your hard work. Our products provide great value to our customers. Our financial position is solid. We have made long-term investments that continue to pay off.

But it is also clear that we are not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures.

Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.

Continue reading this post ...


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January 22, 2009 6:08 AM

Microsoft cutting 1,400 jobs today; up to 5,000 in next 18 months as recession hits harder

Posted by Benjamin J. Romano

In a press release issued moments ago, Microsoft announced that it is cutting up to 5,000 jobs in research and development, marketing, sales, finance, legal, human resources and IT in the next 18 months, starting with 1,400 today.

It marks the first company-wide layoff in Microsoft's history and comes as the company reports fiscal second-quarter earnings that missed the low-end of its own guidance for sales and earnings per share. Its Windows business declined 8 percent as PC sales growth ground to a virtual halt in the quarter ended Dec. 31.

More coverage of Microsoft's cost-cutting

Ballmer's e-mail to employees

Majority of cuts to be in Redmond; total reduction is roughly 3 percent
Contractor spending could be cut up to 15 percent
Attention turns to what groups will see cuts
Gregoire calls layoffs "disheartening"

"While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach," CEO Steve Ballmer said in a statement. "We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today."

The company has pulled its financial guidance for the remainder of the 2009 fiscal year, which ends June 30, blaming "the volatility of market conditions going forward."

CFO Chris Liddell said in a statement, "Economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact. 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. In this environment, we will focus on outperforming our competitors and addressing our cost structure."

The only guidance the company offered is its expected operating expenses for the full fiscal year: $27.4 billion.

Microsoft executives are expected to talk with analysts about the second-quarter earnings announcement and cost-cutting plans at 8 a.m. The earnings report and conference call was originally scheduled to take place after the close of the stock market.

Microsoft's second-quarter results were:

Sales: $16.63 billion, up 2 percent from a year ago, but well below the low-end of Microsoft's guidance of $17.3 billion to $17.8 billion and the consensus of Wall Street analysts, which was $17.08 billion.

Earnings per share: 47 cents, down 6 percent from a year ago, and also below the low-end of the company's guidance of 51 cents to 53 cents, and the consensus of Wall Street analysts, 49 cents.

In addition to the job cuts, Microsoft is eliminating merit increases in the 2010 fiscal year, which begins July 1, the company disclosed in its quarterly report, filed with the SEC.

This, combined with job cuts, and an already announced series of steps to trim expenses, is expected to "reduce our annual operating expense run rate by approximately $1.5 billion," the company wrote in the report.

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