Microsoft cuts 5,000 jobs as profit drop 6%

Microsoft has announced its first ever mass layoffs are posting a 6% fall in quarterly net income.

The software giant will cull 5,000 jobs over the next 18 months, with 1,400 positions being cut immediately.

Microsoft said it hopes to save around $1.5 billion by cutting capex and marketing spend in 2009.

Revenue increased 2% year-on-year to $16.63 billion, yet client revenue fell 8% as the PC market continues to stagnate. Microsoft has also blamed this decline on the trend towards lower-priced netbooks.

The company declined to offer revenue guidance for the remainder of 2009, stating that market conditions are too volatile to make a guess. But CFO Chris Liddel warned the downturn will "almost certainly lead to lower revenue and earnings" on a year-on-year basis.

CEO Steve Ballmer said new products such as the Windows 7 operating system would lead to renewed profit in the long term.

"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," he said. "We will emerge an even stronger industry leader than we are today." 

Microsoft stock declined nearly 12% as a result of the announcement, falling to $17.11. It was the biggest one-day decline in at least 33 months.

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