Ballmer's e-mail to employees regarding layoffs
From: Steve Ballmer
Sent: Thursday, January 22, 2009 6:07 AM
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.
During the second quarter we started down the right path. As the economy deteriorated, we acted quickly. As a result, we reduced operating expenses during the quarter by $600 million. I appreciate the agility you have shown in enabling us to achieve this result.
Now we need to do more. 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.
As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We'll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.
Our leaders all have specific goals to manage costs prudently and thoughtfully. They have the flexibility to adjust the size of their teams so they are appropriately matched to revenue potential, to add headcount where they need to increase investments in order to ensure future success, and to drive efficiency.
To increase efficiency, we're taking a series of aggressive steps. We'll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We've scaled back Puget Sound campus expansion and reduced marketing budgets. We'll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.
Each of these steps will be difficult. Our priority remains doing right by our customers and our employees. For employees who are directly affected, I know this will be a difficult time for you and I want to assure you that we will provide help and support during this transition. We have established an outplacement center in the Puget Sound region and we'll provide outplacement services in many other locations to help you find new jobs. Some of you may find jobs internally. For those who don't, we will also offer severance pay and other benefits.
The decision to eliminate jobs is a very difficult one. 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. I encourage you to attend tomorrow's Town Hall at 9am PST in Cafe 34 or watch the Webcast.
While this is the most challenging economic climate we have ever faced, I want to reiterate my confidence in the strength of our competitive position and soundness of our approach.
With these changes in place, I feel confident that we will have the resources we need to continue to invest in long-term computing trends that offer the greatest opportunity to deliver value to our customers and shareholders, benefit to society, and growth for Microsoft.
With our approach to investing for the long term and managing our expenses, I know Microsoft will emerge an even stronger industry leader than it is today.
Thank you for your continued commitment and hard work.
Steve
"OMG! Profits were only up a little instead of a lot! A whole 6% off our projections! Oh Noes!
People (who aren't me because what I do is vital, LDO) will have to collect unemployment and wonder where they're going to work (b/c we're the biggest employer in the area and the whole reason a lot of you moved here) til we make that money up.
We can't have Gartner rate MSFT stock a "fail." So come back in a couple of years.
Until then here's an awesome video of Marisa Miller in a bikini telling you how you can get mad gov't cash for realz!*"
*(links to "Never Gonna Give You Up" by Rick Astley)
But seriously, if they can get serious about identifying the dead weight in their organization (when I contracted there I saw numerous people whose daily work consisted solely of trying to keep their jobs) it would be awesome, but I strongly believe they're going to do what most of corporate America does: look at a list of job titles and cross some out.
Can you make a coherent sentence?
"But seriously, if they can get serious about identifying the dead weight in their organization (when I contracted there I saw numerous people whose daily work consisted solely of trying to keep their jobs) it would be awesome, but I strongly believe they're going to do what most of corporate America does: look at a list of job titles and cross some out" really translates out to rubbish. I'll take out your unnecessary and rather unrelated parenthesized comment for you to see. The comment should have been an independent sentence or something. There's absolutely no use for it in the middle of your sentence. It's as if a child decided to copy and past statements and thoughts from absolutely unrelated parts of the internet to make your comment.
without the ridiculously placed comment:
-> "But seriously, if they can get serious about identifying the dead weight in their organization it would be awesome, but I strongly believe they're going to do what most of corporate America does: look at a list of job titles and cross some out" Your comment makes no sense. In case I'm interpreting this awkwardly structured sentence wrong, here's my interpretation of your brainfart. "it would be an awesome thing if they were serious about identifying dead weight, but I think they look at job titles and cross some out." Despite what you might believe, steve was actually pretty explicit when he said he found jobs that are not as essential to the customer or, more importantly, the company. How much more serious can you get? I fail to understand where you pull this conclusion out of. Anyways, Steve goes on to say he'll be slashing jobs in the marketing field and such. Obviously he has to go somewhere to find what jobs there are in the company and find jobs that are extraneous to company progress. Do you suggest he cuts the engineers and keeps the marketing? Are you just plain stupid or just completely ignorant of how the production of microsoft products come about? Anyways, Steven isn't even doing that. If you had actually read the article, you'd realize he cuts jobs from every branch of microsoft. There are cuts from R&D to Sales.
In addition, your choice to reply to the first comment despite having no connection to that comment shows how blatant your attempt at attention grabbing is. I'd also like to take this opportunity to tell you how stupid, irritating, and ineffective your attempt at satire, possibly comedy, was. Translating from exec speak was anything but funny or witty. Could you just submit a normal comment? Possibly something that makes sense?
@super2online
I do applaud microsoft for their progress like you. Despite having a sullied reputation, I've never had any problems that I could directly associate to the windows OS. All 4 of my personal computers have never seen the blue screen of death. My computer never freezes and I play a number of games on my computer as well as use a number of programs on my computer. I absolutely hate the people who possess such an arrogant view towards microsoft. They brought a cheap OS to the world and they still are. I'd like to see you find out how much a MAC costs in comparison to windows XP or VISTA with the same specs.
"I do applaud microsoft for their progress like you." => I, like you, applaud Microsoft for their progress.
"MY COMPUTER never freezes and I play a number of games on MY COMPUTER as well as use a number of programs on MY COMPUTER." Putting aside any demerit for being a horrific run-on, have you ever heard of pronouns?
"They brought a cheap OS to the world and they still are." There's no copula verb in the first clause of this sentence, so I don't know what parallelism you think you're making with that "are" in there.
Also, I'll have you know that I signed up for this CNET account exclusively to troll you. Your trolling inspired me to troll. You've made the internet a worse place.
I see this and it makes me very cheesed off. Some fat bloated executive is upset because he might have to put off buying that new townhouse in Rio, so he figures that if he cuts an employee, he wont have to. And to H3ll with the poor employee who now is probably going to lose his home, car etc. Executives spout this kind of patronizing dribble in an order to try and avoid some worker going postal, as well as to try and rationalize this for their own conscience.
This letter roughly translates to...
We are not making as much of an increase in profit this year as we thought so we are kicking you to the curb in order for our executives to be able to spend an extra week on vacation...
Where are the unions when you need them.
Companies now a days worry about pleasing their shareholders more than they do pleasing those who make that possible.
Microsoft should go back to their core business and stop pursuing Google and Apple and stop wasting money on foolish endeavors like search and Zune, do not get me wrong I love my Zune but Microsoft was a little to late to the game. If they want to keep it going they should drop the price and stop making it look like an iPod killer because it's not. Make it cheaper and it will shine. The search business should be outsource to Yahoo and both companies will make money and take a little bite out of Goggle who is the king. Some times it's not bad being second if you are doing good.
Ballmer should focus in its business and not Google's, then Microsoft its going to shine again. Focus on what makes you money and in what's not.
At another company I know of, all employees were informed that merit increases company wide would only be 1.5% (which saved the company about $1 million compared to 3% raises)--6 months later, it was announced that the CEO was getting a bonus of $7 million; the highest he'd ever been given.
I hope Obama can do something about escalating executive pay--AIG, B of A, Citibank, Merrill Lynch--all those executives used taxpayer bailout funds to cover losses, so they could still pay their own bonuses (I believe the combined bonuses of banking execs last year was over $7 BILLION--thanks, taxpayers). All these executives sit on each others board of directors, and they keep giving themselves bigger and bigger comp packages, and keep taking it from all the factory and office workers to still grow earnings so they don't upset some overpaid investment bankmutual fund analyst. It's the 1920's robber barrons all over again (and we all know how that ended).
Companys are to make money for shareholders/owners. That's its purpose unless it is a non-profit.
You don't cut off the head of a trapped animal to free it, you cut off it's trapped leg/tail so it can continue to live free even if not whole.
They are dropping a Net of 2-3,000 jobs in seven departments, what percentage of the entire company is that?
Considering Microsoft is getting attacked on multiple sides (EU, Linux on the desktop, marketing failures with Vista, development of Windows 7 and its coming marketing blitz and slower economy reducing the number of computers being sold reducing the number of Windows licenses being bought, rising cost of health care, cloud computing competition from Google, etc.) this isn't as bad as it sounds.
Unions, these days, are the reason why the US Auto industry needs a bailout while foreign auto makers with plants in the US are still going.
Bill Gates did not start that company to make his employees rich. He took and still takes all the risks associated with owning a business. Go start your own business and see how much more effort and love you pour into it than any of your employees and then you might start to understand what capitalism is all about.
*Unchecked*, unrestrained capitalism is what got us into this mess! Sure, capitalism is fine, as long as it is managed effectively and soberly. An unregulated free market is just as much of an extreme as a completely regulated market (i.e. the former USSR). Neither one works.
Anyway, moving onto the auto industry. Dont get me wrong, the auto industry is extremely messed up at the moment, and sure as hell do not show unions as being that great. Once again though I also think that the auto industry played a MAJOR role in putting together the United States. Concerning the bail out, the money may not move down to the workers to try to keep jobs, but you just have to think that they will do the best of it. Just think about how bad it would be if those major industries started laying off people left and right. More unemployeement and a lot worse of an economy since no one has any money to put into the economy.
Unions these days are the reason why most people have stable jobs with a stable money flow.
You know why foreign auto industries are still going? How do you think it would work out if say a foreign auto industry were to move one of their factories to the US and start saying we are going to give people say $15 an hour. We also have another auto industry that is UNION which has a factory close to there and is giving out $20 to $25 an hour with full benefits. How would a foreign factory be able to compete with that? Would you seriously work for the foreign auto industry at $15 with no benefits and has job openings for you? The foreign auto industry has to give $20 to $25 an hour plus benefits to even get anybody. By the way, ever heard of temporary services? Many of the foreign factories will also hire temporary services companies to get more people into their business. That way it shows the factory doesn't look like it fires many people and has "great" types of jobs. Just a few sidenotes on how some of the foreign auto industries look so good.
Just my two cents.
Microsoft doing good by them though by helping to make the transition easy. These cost cutting initiatives leaves believing that the Windows 7 launch will be a web cast similar Windows Essential Business Server 2008.
Hopefully the people MS lays off will find other employment.
Stop expecting so much. This kind of growth is simply unsustainable - at least not for companies based in and doing business in this country.
Microsoft has far deeper issues than most realize. Time for the board to fire the Duncan Hines Assistant Brand Manager and put a turnaround expert in charge.
Companies don't jump on a new OS even if it the best reviewed OS on the planet. Most companies will upgrade to a new OS after it's been out about 3-5 years reguardless of how good or bad the OS is. Generally when they feel the OS will support the business all new PC's will be ordered with the new OS on them as they come off lease or the warrenty expires and they replace them. I've working in quite a few fortune 500 company's and it's the same for all of them. This has held true from 3.11 till now so take it to the bank. Vista will become the primary OS in the not too distant future. The TCO is cost prohibitive to move to another OS for all the big boys.
I believe the reason most major companies stick with XP as opposed to Vista is simply due to the fact that a lot of them adhere to the Common Criteria assurance levels when deciding on what operating systems to deploy. Vista and Server 2008 are as of now only EAL level 1 where XP and Server 2003 are EAL 4+. (CommonCriteraPortal Web-Site, 2008)
Reference
CommonCriteriaPortal.org Web-Site (2008) Certified Product List: OS. Retrieved: January 23rd, 2009 From:
http://www.commoncriteriaportal.org/products_OS.html#OS
MS is not cutting jobs because of slim profits, they are cutting jobs because they know what is coming. Companies across the globe are going into survival mode, and they have the hope that they can live to fight another day.
The only loyalty that a company has, is to its shareholders, this is the unfortunate reality. The first objective of a business is to make a profit, if it cannot make a profit, then all of the other things further down the list do not matter.
Also, it is interesting to see all of the union bashing going on by what I will assume to be young professionals. The only reason that we have holidays, vacation days, A/C in the building, insurance, 401k, some semblance of a 40 hour work week, are all because of unions. The auto industry is a poor example of what is left over.
The tech industry as a whole should unionize across the board - especially at someplace like MS, such that MS feels the pain when they do something to screw employees. You as an individual employee have ZERO leverage with a company. If you are a MS employee, do you think that Steve Ballmer is looking out for your best interests? The same goes for Company X - do you think that Mr. CEO gives a rat's a$$ about you when the stuff starts to hit the fan? If Ballmer could get away with it, he would pay everyone $5/hour and everyone would be working 16 hour days with no days off.
That's called an H1B visa.
I also agree with your assumption that many of the people writing the comments espousing the pro-capitalism viewpoints are young professionals who likely have no clue what Unions have done for the people on whose backs successful companies were built. I'm sure that many of them think that they will be rich and wildly successful someday and are looking to protect their future interests and fellow members of the Old Boys Club. Come back and talk to us after you've been laid off a few times in order to make your former companies "leaner and meaner," fellas.
If you got laid off 1/2 a dozen times in your IT career, then you are probably doing something wrong. Find out why you where laid off and work from there.
"Unions, these days, are the reason why the US Auto industry needs a bailout
while foreign auto makers with plants in the US are still going."
- There's clearly no point in trying to persuade you that there are advantages to unions (after all, what did the Romans ever do for us?), but once you've acquired a few responsibilities of your own, and been kicked to the kerb a few times yourself you might start to see how such a concept might be useful, probably just a little too late. After all, isn't a liberal just supposed to be a conservative who hasn't been mugged yet?
Speaking as an offshore observer and a longtime driver of cars from four continents (including the one you're a part of), and as a contributor to a number of online motoring forums, I can tell you that the reason your auto industry is in the toilet is mainly because -- with very few exceptions -- that's where its product belongs. The high point of automotive technology simply AIN'T ever going to be any sort of a truck.
And as if the monster perks of auto execs weren't outrageous enough to begin with, now it's going to be YOUR tax dollars that will be funding the bonuses and payouts that will be maintaining these champions of private enterprise in the lifestyles to which they've been allowed to become accustomed ... out here, we call that "irony" ...
And for a lot of the same reasons, spare me any crocodile tears over how circumstances are conspiring against Microsoft. They had a good idea in 1981 and didn't know when to stop, or how to keep the shareholders in the manner to which THEY'd become accustomed, thanks to some dodgy marketing practices, questionable quality and unreasonably generous margins. Everything else is just poor understanding of the market, and even poorer product management.
I don't carry any brief for Linux or any other operating system of relevance mentioned here so far, but I can say that if I'd had shares in Microsoft, around about now I'd be wishing I'd unloaded them just before XP landed. I wouldn't be waiting to see how low they can go before they bounce back, though ...
Now Gates can go t o Congress and load up the campaign funds of Congressmen and plead that he needs the H-1B & L-1B increased.
Gates and Ballmer, two un-American lowlifes.
- by kenniec47 January 23, 2009 8:18 AM PST
- I must be missing the line where he says, "top management will also share in the pain. I have ordered a 10% reduction in all upper management salaries, and a 20% reduction my own salary."
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