Microsoft job cuts are another sign of the times


Microsoft Corp. (NASDAQ: MSFT) today joined the ever-growing parade of companies firing employees.

The world's largest software maker is laying off 5,000 people, about 5% of its staff, in its first company-wide dismissal of workers. The move is not surprising.

Though the Redmond, Washington-based company is a cash-generating machine, investors are worried that it will be hurt by the slowdown in corporate IT spending. Last month, Forrester Research projected that spending by businesses on technology would rise 1.6% in the U.S. That's down from a projection of more than 6% made in August.


Many tech companies are struggling. Intel Corp. (NASDAQ: INTC) recently announced plans to lay 6,000 people off because demand for personal computers has dropped. International Business Machines Corp. (NYSE: IBM), which yesterday reported better-than-expected results, also reportedly continues to trim staff. Google Inc. (NASDAQ: GOOG) also is reportedly starting to pinch pennies, laying off 100 recruiters and closing some engineering offices.

Microsoft continues to pour billions into an ultimately futile pursuit of Google in search, Apple Inc. (NASDAQ:AAPL) in portable music players, and Nintendo Ltd. (OTC:NTDOY) in gaming machines. For the company to thrive, it is going to have to get back to basics. I mean, does anyone know anyone who owns a Zune?

With its shares down more than 30% over the past year, Chief Executive Steve Ballmer has little choice. Don't be surprised if Bill Gates starts to cut back on his philanthropic work as Microsoft navigates through some of the toughest times in its history.

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Last updated: February 13, 2012: 07:03 AM

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