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Microsoft is rumored to be preparing for redundancies, with staff expected to be cut on January 15.

MiniMicrosoft, a blog dedicated to watching the company, has reported snippets of reports talking of internal reorganizations amid budget cuts and staff interviewing for their jobs in the server and tools business and in the online services group.

The long-running blog, by an anonymous Microsoft employee, said staff are being been called into "meetings and interrogations about the work they are doing", set impossible coding tasks and asked to account for their work by the hour.

The blog said one 120-person organization in the server and tools business has been broken up for lack of budget while 70 people in online services and the SQL Server business - which is part of server and tools - have been given six weeks to find alternative employment within the company.

According to the blog, Microsoft's Live Meeting "is one of the worst places to be right now" and in its "death throws". Live Meeting is the online conference service.

A Microsoft spokesperson told The Reg it does not comment on "rumors and speculation".

Rumors of layoffs are on the "financial grapevine" and - if they come off - would come exactly one week before Microsoft announces its second-quarter results to Wall St.

That quarter spans the normally lucrative Holiday shopping period, when consumers usually snap up PCs.

This year, that period is likely to make for the opposite of good reading. With the US in recession, the UK about to hit recession, and employers in both countries announcing massive layoffs consumer spending is down. That's impacting sales. Retailers, meanwhile, are discounting heavily - impacting profits.

Any cuts - thought to be Microsoft's first in its 30-year history - would follow a hiring freeze and come after years of massive expansion, to try and grow a successful online services business. Head count has grown 28 per cent to 91,000 in just two years as it has hired individuals and bought companies like online ads shop aQuantive - Microsoft's biggest acquisition at nearly $6bn. The payroll has expanded by 49 per cent since 2005, with increases across R&D, sales, marketing, and support.

If true, it seems like the cuts are in the lighter, services end of the company's business spectrum and would be in keeping with expectations.

The online services group is home to search and advertising, which have consistently failed to make a profit despite billions of dollars in investment being pumped in. Microsoft kicked off December by announcing Yahoo!'s former president of search and advertising technology Qi Lu was joining to run the online services group. ®

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