KEY POINTS:
Microsoft is considering a plan for substantial redundancies to combat the economic downturn.
At least 10 per cent, and possibly as much as 17 per cent, of its global workforce could be cut in what would be the first mass layoffs in the software company's 32-year history. Globally, up to 15,000 jobs could be under threat.
According to rumours in the US, overseas divisions could be particularly hard hit, and an announcement of the plan could come within two weeks.
The company said yesterday that it did not comment on speculation.
Analysts say the software giant faces pressure on several fronts this year. With retail spending down, consumer sales of its Windows operating system - installed on nine out of 10 personal computers - could slow.
Businesses, too, are scaling back, threatening licence fees from its Office products and other corporate software.
Meanwhile, online advertising growth has decelerated sharply as a result
of the recession, threatening Microsoft's hopes of turning a profit at
its troubled MSN internet business.
"The prevailing wisdom on Microsoft is that the company may pre-announce disappointing December results," said Brad Reback, analyst at Oppenheimer & Co.
"Should such headcount reductions materialise, we would view them as a positive sign that management is interested in preserving the company's operating margin structure through the downturn."
A 10 per cent cut in Microsoft's 90,000-strong global workforce could save US$1.2 billion a year ($2 billion), analysts say.
A Silicon Valley website, Fudzilla, has reported that up to 17 per cent of Microsoft's employees could lose their jobs, citing internal conversations at the company.
The website said that the European divisions might be disproportionately affected. Microsoft set up its British subsidiary in 1982, its first overseas outpost, seven years after its foundation, seven years after Bill Gates created the company to make operating systems for the nascent personal computer market.
Microsoft is due to report earnings for the final three months of 2008 on January 21, but could announce any revenue shortfall and restructuring plans earlier.
- INDEPENDENT
