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Microsoft axes 5,000 staff as Q2 profit dives 11%

Sales and earnings miss Wall St consensus

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Microsoft is slashing 5,000 jobs after it posted a profit of $4.17bn, or 47 cent per share, in its second quarter earnings report, undershooting Wall Street expectations.

The software giant, which saw its shares fall 8.5 per cent to $17.88 following the announcement, said it would not be offering profit forecasts for the rest of the fiscal year.

For the second quarter ended 31 December 2008, revenue climbed slightly by two per cent to $16.63bn. Analysts had forecast $17.1bn for Microsoft’s Q2 results.

It pulled in operating income of $5.94bn, down eight per cent on the same period a year earlier. Net income panned out to $4.17bn, delivering earnings per share of $0.47, two cents less than analysts had expected.

Microsoft will axe up to 5,000 staff in its research and development, marketing, sales, finance, legal, human resources and IT units over the next 18 months, including 1,400 employees who were handed their pink slips today. The firm's current headcount is around 91,000 staff worldwide.

A Microsoft spokesman confirmed to The Register that the firm "anticipates less than two per cent of the 2,900 UK employees" would lose their jobs.

He added that those 60 or so Blighty workers had been part of today's 1,400 staff cull at Microsoft.

The company, which hopes to reduce costs by $1.5bn following the cuts, confirmed it had taken a hit from the significant decline in the PC market, with client revenue dropping eight per cent in the quarter.

"While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach," said MS boss Steve Ballmer.

"We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today."®

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