Software giant Microsoft has admitted it is not immune to the effects of the gloomy economy by axing 5,000 jobs, following worse than expected second quarter results.
The vendor announced a drop in profit to $4.17bn (£3bn) for the three months to 31 December, down 11 per cent on last year.
Turnover stood at $16.6bn for the quarter, a two per cent increase on the same period the previous year.
Microsoft will cut jobs in R&D, marketing, sales, finance, legal, HR and IT over the next 18 months, including 1,400 jobs today.
Microsoft said these initiatives will reduce the company’s annual operating expense run rate by $1.5bn and reduce fiscal year 2009 capital expenditures by $700m.
Steve Ballmer, chief executive of Microsoft, said: “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.
"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.”
Chris Liddell, chief financial officer at Microsoft, said: “Economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact.
“We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year. In this environment, we will focus on outperforming our competitors and addressing our cost structure.”
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