Microsoft will make the first mass layoffs in its 34-year history, cutting 5000 jobs as demand for personal computers falls and even one of the world's richest companies gets burned by the recession.
Releasing its results for the second quarter of its fiscal year, Microsoft said net profit fell by 11 percent from a year ago to 4.17 billion dollars on revenue of 16.63 billion dollars, a two percent rise over a a year ago.
The Redmond, Washington-based company said earnings per share were 47 cents for the quarter which ended on December 31, less than the 49 cents per share forecast by analysts.
Microsoft's shares fell 8.31 percent in early trading on Wall Street to 17.77 dollars.
"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," Microsoft chief executive Steve Ballmer said in a statement.
"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," he said.
"In light of the further deterioration of global economic conditions" Microsoft said it was eliminating "up to 5,000 jobs in R&D (research and development), marketing, sales, finance, legal, HR (human resources), and IT (information technology) over the next 18 months, including 1,400 jobs today."
Microsoft employs some 91,000 people and the recent job cuts announced amount to a reduction of about 5.5 percent of its global workforce. Rumors of job cuts at the world's biggest software firm had been circulating for weeks.
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