Microsoft said on Wednesday that it is notifying approximately 800 workers that their jobs are being eliminated as the software giant completes the layoffs it announced earlier this year.
In January, Microsoft said it would cut approximately 5,000 positions before the end of the next fiscal year, which ends in June. With the latest cuts, Microsoft said it has essentially completed those layoffs. Microsoft CEO Steve Ballmer said in May that it was mostly, but not entirely, done with the job eliminations.
Actually, though, the latest cuts will push Microsoft past that 5,000 number. Once these cuts are made, it will have eliminated approximately 5,800 jobs since January, said Microsoft spokesman Lou Gellos.
Wednesday's job cuts were spread across multiple businesses and around the globe, Gellos said. Microsoft didn't announce any specific products that are getting the axe as a a result of Wednesday's cuts, although it has cut a variety of products in recent months, including Microsoft Money, Windows Live OneCare and, just this past week, its small business accounting product line.
There could also be additional cuts, even as Microsoft does some hiring in key areas. Although January's layoffs were the company's first across-the-board cuts, it regularly reviews its businesses and makes adjustments as necessary, Gellos said.
"We'll manage our businesses closely and do the things that we need to do," Gellos said.
Update 12:05 p.m. PT: As noted by TechCrunch and others, among those let go on Wednesday was Don Dodge--one of Microsoft's key voices in Silicon Valley and a director on the company's emerging business team. Dodge wrote about the turn of events on his personal blog Wednesday.
In the wake of additional layoffs on Tuesday, Microsoft is scaling back--but not totally eliminating--several products. After cutting 1,400 jobs in January, Microsoft said on Tuesday that it is cutting more than 3,000 more jobs.
Among those products affected are Microsoft's ResponsePoint phone system, its .Net Micro Framework, and its MSN Direct Service.
Microsoft said it will continue to sell and support the initial version of ResponsePoint, which is aimed at small businesses.
"We will also continue to promote the product online and spotlight compatible 3rd party services and add-on products," Microsoft said in a statement. "The team is evaluating the strategy for the next version of the product and will continue to investigate the opportunity in the small business market."
Things are similar for MSN Direct, which offers traffic and other services to devices like in-car map systems.
"While the group was impacted by yesterday's job eliminations, they will continue to maintain the current MSN Direct service and invest in developing a low cost receiver for multiple devices," Microsoft said.
As for the .Net Micro Framework, Microsoft said it will make the project a community source effort.
"Microsoft will continue to support existing customers according to any agreements that we have in place with them, and will honor our lifecycle support pledge," Microsoft said. "Forums continue to be available at MSDN. After moving to the community model, new customers will be supported by the community."
The software maker said it will eliminate the royalties that had been associated with the product. As a result of the shift, Microsoft said the team was affected by job cuts and the remaining workers will shift to the broader .Net Framework team.
Microsoft also confirmed it made deep cuts at Massive, its in-game advertising unit. However, the company said a report Tuesday that three-quarters of staff were cut was an overstatement. Tuesday's cuts affected 28 percent of full-time staff. The cuts also apparently hit hard two Microsoft-produced magazines for developers, but I am still working on getting details on that front.
Also of note, of course, is the fact that after the January cuts it took some time for some of the product decisions to be clear. At the time, Microsoft said it would cut 5,000 jobs over an 18-month-period.
Meanwhile, Microsoft left the door open to further job cuts.
"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," Ballmer said in a memo to staff.
The company has also taken other actions including cutting spending on vendors, travel, and contractors, and even canceling its annual picnic.
In the wake of handing out 3,000 layoff notices Tuesday, Microsoft CEO Steve Ballmer sent an e-mail to staff.
Ballmer characterized the cuts as the second phase of the plan announced in January. At the time, Microsoft said it would cut 5,000 jobs over an 18-month-period. With the cuts made in January and those announced on Tuesday, Microsoft has now nearly eliminated all those positions.
Here is the text of Ballmer's e-mail, which was seen by CNET News.
From: Steve Ballmer
Sent: Tuesday, May 05, 2009
To: Microsoft - All Employees
Subject: Update: Realigning Resources and Reducing CostsIn 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
Microsoft on Tuesday notified more than 3,000 workers that it was eliminating their jobs.
The software maker said in January that it would cut up to 5,000 jobs over the next 18 months. It made 1,400 cuts at the time. With the second wave of notifications on Tuesday, Microsoft has cut nearly all 5,000 jobs already.
Although it didn't announce further layoffs, the fact that the company has already made nearly all the reductions under the January plan means further job actions will have to come under a new round of cuts. In a memo to Microsoft workers, CEO Steve Ballmer left the door open to further action.
"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," Ballmer said in the memo, which was seen by CNET News.
While the positions cut in January were more U.S.-centered, the cuts announced Tuesday were split roughly evenly between U.S. and international workers. The cuts were across the company in terms of job type.
"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," Microsoft said in a public statement confirming the cuts. "While job eliminations are always difficult, we are taking these necessary actions in response to the global economic downturn."
The company still plans to hire 2,000 to 3,000 workers this year in some growing areas of focus, including its online services business.
With the economy in the tank, Microsoft has decided not to let its workers follow.
The software maker has confirmed it has canceled plans to have a bar as part of an expansion of its Redmond campus.
The pub, which had been planned for more than a year, was to be part of a collection of restaurants and stores that were due to open next week as part of the company's new headquarters for its Entertainment and Devices unit. Spokesman Lou Gellos confirmed the company recently decided to pull the plug.
"We had to take another look at this," Gellos said. "We are sensitive to the business environment and that meant not having a pub."
In January, Microsoft made the company's first-ever companywide layoffs and has said it is cutting as many as 5,000 jobs amid the broad economic downturn. The company has also been cutting vendors, travel, and other expenses as it looks to trim costs.
The bar was planned for "The Commons," a central area in the center of the Entertainment and Devices campus. Although the bar won't open, the area will still feature a collection of popular Pacific Northwest eateries as well as various cell phone shops, a salon, and other outlets.
The Commons is surrounded by four buildings for the entertainment unit, one of which is already occupied and another that is due to be filled in the next week or so. By mid-July, Microsoft expects all four buildings to be occupied, Gellos said.Word that Microsoft kicked the keg came earlier on Friday from a report on Seattle-area tech site TechFlash. The owner of the proposed pub told TechFlash he was stunned by the news, which came via a letter from Microsoft. The bar, which was due to open on Monday, already had been outfitted with its beer taps, and workers had been hired.
Editor's note: Since this story was published, Microsoft has reversed its decision. You can read an updated story on its decision here.
Microsoft says it made an accounting error when it laid off some employees last month and now feels the best way to correct the error is with what will likely add up to a public relations blunder.
The software giant, which recently laid off 1,400 employees, sent letters (see image below) this week to some of those former workers letting them know that their severance payouts were a bit too "generous" and respectfully requested that the former employees pay back that money, according to a report Saturday on TechCrunch.
News.com Poll
"An inadvertent administrative error occurred that resulted in an overpayment in severance pay by Microsoft," the letter states. "We ask that you repay the overpayment and sincerely apologize for any inconvenience to you."
A Microsoft spokesperson confirmed the authenticity of the letter posted by TechCrunch but declined further comment, saying it was "a private matter between the company and the affected people."
The company declined to specify how many of these letters were sent out, and it's unknown how much the overpayments total, but it did indicate that some laid-off employees were also undercompensated.
The letter failed to provide an explanation for the accounting error but did manage to add--with underlined emphasis--a veiled threat of monetary punishment if the money wasn't repaid, at least in the form of a tax impact.
A scanned copy of the letter Microsoft reportedly sent to some former employees.
(Credit: TechCrunch)
Microsoft has quietly reorganized its Zune team, splitting up the hardware and software teams, CNET News has learned.
Rodriguez
(Credit: Microsoft)The software and services portion of the Zune team--the bulk of its staff--will be added to the portfolio of Enrique Rodriguez, the vice president who currently runs Microsoft's Mediaroom and Media Center TV businesses. The hardware team, meanwhile, will now report to Tom Gibbons, who also leads the hardware design efforts within Microsoft's Windows Mobile unit.
"We're just being very pragmatic and even more so in a world in which not even Microsoft can afford to over-invest," Rodriguez told CNET News.
The move was made on January 22, as Microsoft made its first-ever companywide layoffs--layoffs which also hit the Zune team, although Microsoft won't say how many people were cut. It also follows a holiday quarter in which Zune sales dropped by more than half from a year earlier.
In an hour-long interview on Thursday, Rodriguez said the move was not made in response to recent Zune sales, but rather as the company looks to create a more unified entertainment business and gears up to expand the Zune service to be available on more than just Microsoft's own devices.
"The goal is to make non-gaming entertainment a first-class citizen within Microsoft's business," he said. That means building better software and gaining scale "a little further out than just in Redmond."
"The other thing we are trying to do, like any other business, is to make some money," Rodriguez said.
Rodriguez wasn't ready to offer details on when the Zune service would come, say, to Windows Mobile, but he did say to expect products within this calendar year that take the Zune service beyond just Microsoft's own line of digital music players.
"Zune the service needs to transcend Zune the device," Rodriguez said.
Zune, the device, has faced an uphill battle in its effort to offer a rival to Apple's iPod. Although the company has gained some share, it has come largely at the expense of the companies that were on the market with devices using Microsoft's PlaysForSure software, which predated the Zune.
Microsoft has been saying for some time that it would expand to other "tuners" beyond the Zune player and work on that front predates the latest reorganization. Meanwhile, the company says it is not getting out of the Zune hardware business altogether and in fact new Zune hardware models are expected to come out this fall.
"You have to have a hero device," he said. "If you ask me how important is it from a numbers perspective, today it's ultra-important. If I do my job right, part of my job is to make it less important. Part of my job is to make sure the service comes into every device."
But that doesn't mean Rodriguez doesn't see a need for Microsoft to keep making the Zune.
"The reality is that will continue to be the one vertical device that we control every...aspect of it all the way to what it says on the box," he said. "So shame on us if it is not the best."
Rodriguez said that a large part of the reorganization was about bringing more heads together to work on a unified entertainment approach, one that is headed toward a more cloud-based approach.
"To write the type of software...it's a complex job, it's a Microsoft scale job," he said. Microsoft won't say how many people work on Zune now or how large the team was prior to the reorganization, however, Rodriguez said by combining teams, Microsoft has more people focused on entertainment broadly.
"The aggregate of people is more today than it was two weeks ago," Rodriguez said. "We're taking what used to be 300 people there, 300 people there, and 300 people there...into being 1,000 people all around the same vision."
The fallout from Thursday's cost-cutting moves by Microsoft continues. On Friday, Microsoft announced that it is delaying its plans for a massive data center to be built in West Des Moines, Iowa.
It is an abrupt reversal for Microsoft, which announced its plans for Iowa just five months ago as part of its massive push into the data center business. By October, though, the software maker was already detailing plans to cut its data center spending by $300 million. Now Microsoft is looking to cut things even further.
"We are still continuing construction of our facilities in Chicago and Dublin, and are planning to open them as customer demand warrants, Microsoft's Mike Manos and Arne Josefsberg said in a blog posting on Friday. "But given the current economic climate we're going to do the right thing for our business and shareholders and revisit our plans on a quarter-by-quarter basis."
Microsoft tried to put its best spin on the move, saying that long-term the cash crunch will help drive customers to turn to Microsoft rather than building out pricey data centers themselves. Josefsberg and Manos also said that Microsoft will find less expensive ways to have the capacity it needs to run Windows Live Hotmail, Windows Live Messenger, and all of Microsoft's other online services.
"We've been preparing for lean times for a while," the pair said. "This recession is the ideal backdrop to implement small changes that target big needs. Frugality drives innovation, and limited resources are just another forcing function to develop creative solutions to infrastructure needs. For our industry, this means more reasons to identify the small tweaks to products or operational approaches that can unlock big opportunities."
An aerial view of the site in West Des Moines, Iowa, where Microsoft is now delaying plans to build a massive data center.
(Credit: Microsoft)Microsoft confirmed on Friday that it is pushing together its Office Live and Windows Live efforts.
The company isn't changing the development cycle or the leadership of the teams working on the products, but it is promising that consumers will be able to get to both sets of services from a common Web location.
Microsoft didn't say exactly what that spot will be, but the Windows Live branding is expected to be the one that survives the combination, I'm hearing. (But what about Officeliveworkspacecommunity.com? Does Microsoft really want to give up that prime, easy-to-remember address?)
Although it declined to clarify whether Thursday's job cuts affected the Windows Live and Office Live teams, the company said there were no changes to the top ranks of either group.
The merging was first noted on Thursday by ZDNet blogger Mary Jo Foley.
Microsoft spread the 1,400 immediate layoffs broadly across the company's units, according to a source familiar with the cuts.
The software maker announced plans early Thursday to cut up to 5,000 jobs over the next 18 months, with the first round coming right away.
Hardest hit in those initial cuts, according to the source, were Microsoft's Entertainment and Devices unit, followed by the Server and Tools unit and the Microsoft Business Division, which houses Office and Microsoft's Dynamics products.
Microsoft declined to go into detail on its job cuts, though it said in its press release that it was thinning everything from product research and development to support functions such as HR, finance, and information technology. As would be expected, Microsoft said the vast majority of its cuts to be in the greater Seattle area where most of the company's workers are based.
The software maker indicated it is , though it is re-evaluating its priorities in some areas. It is still hiring in some businesses, such as search, CEO Steve Ballmer noted on a conference call with analysts.
Anyone who wants to share more detail should feel free to drop me a line.
Update 3:50 p.m.: Microsoft confirmed that the Puget Sound area cuts on Thursday accounted for 872 of the 1,400 jobs that were cut.
