Microsoft Lays Off 800, Exceeds Original Forecast

Microsoft on Wednesday laid off around 800 employees as part of the 5,000 job cuts it announced back in January. The software giant, which has been hit hard the past several quarters by weak PC and server demand, also left the door open to additional job cuts.

The latest job cuts are spread across multiple businesses and locations and are designed to reduce costs, increase efficiency and prioritize Microsoft's focus areas, a spokesperson said in an e-mail to Channelweb.com. Microsoft will continue to hire "in priority areas" but may see fit to institute "additional headcount adjustments," according to the spokesperson.

As noted by Paidcontent.org and TechFlash, Microsoft had already parted ways with 4,600 employees this year, and so Wednesday's round goes beyond the 5,000 job cuts Microsoft had originally intended to make by June 2010.

Microsoft laid off around 1,200 employees in January and more than 3,000 in May, when it also left the door open to further cuts. Previous job cuts have affected its sales and marketing teams as well as Microsoft's Flight Simulator, Office Accounting, and Premium Mobile Experiences divisions.

Don Dodge, director of business development in Microsoft's Emerging Business Team, was included in today's layoffs, and expressed surprise with the move on his personal blog. In another blog post, Michael Arrington of TechCrunch called the move "a huge mistake for Microsoft and praised Dodge as "the face of Microsoft" for people in the startup community.

On several occasions this year, Microsoft CEO Steve Ballmer has described the economic situation as a "once-in-a-lifetime set of economic conditions" that will eventually result in the economy "resetting to a lower level of business."

Last month, Microsoft handily beat Wall Street analyst expectations for its first fiscal quarter earnings and revenue, but saw very steep drops in both its Windows and Windows Live and business division revenue. All eyes will be on Microsoft when it reports fiscal second quarter results early next year, as these will offer the first indications of Windows 7's impact on moribund PC sales.