Microsoft revealed its grim reality this morning during its quarterly earnings call. Despite generating revenues of $16.63 billion, a slight improvement year-over-year, the company reported its client group revenue dropped 8 percent and net income 11 percent, to sit at $4.17 billion.
With an extremely rare loss in its Windows and Office businesses, one has to wonder why? Microsoft accurately points the finger at netbooks which often involve licenses for Windows XP, a less expensive OS than Vista. Of course, global economic devastation had plenty to do with the company’s poor results as well.
(Image Credit: cc) JD Lasica/Socialmedia.biz)
Speaking of devastation, Microsoft’s chief executive officer Steve Ballmer sent out a company-wide memo this morning detailing some significant restructuring he says is needed to get the company’s finances in check. All Things Digital obtained a copy of the memo, which includes the stark revelation that 5, 000 employees will lose their jobs including 1, 400 layoffs slated for today.
The layoffs will run across most company divisions including research and development, but most layoffs will happen in less essential division like sales and marketing. Microsoft will also be cutting travel costs, building expansions and probably freezing salaries as well. All of this despite the company slicing $600 million off its operating expenses in the last quarter.
Windows Mobile is usually spun into the client group but Microsoft didn’t reveal anything about its mobile operating system. The company did have some success in its Entertainment and Devices group–3 percent growth on its 6 million Xbox 360 sales–and its Server and Tools group. Windows 7, which doesn’t have a release date yet, is also showing a lot of promise, and the company will likely roll out its Windows Mobile 6.5 OS by the second half of 2009 as well.
