(By Salman - iStockAnalyst Writer)The rumors of job cuts at software giant Microsoft (NASDAQ: MSFT) is gaining momentum amid declining corporate spending on computers, software and information technology.
An employee of Microsoft who blogs at "Mini-Microsoft" writes: "Just heard on the finance grapevine. MSFT layoffs are coming on January 15th. They are substantial."
A few days back Oppenheimer & Co’s analyst Brad Reback said in a report on Microsoft that a layoff exercise "would be a healthy move for the company." He added that such a move would be well received by the Wall Street and would "signal that profitability is more important than revenue growth during this very difficult time." The analyst advised the software maker to eliminate 10 per cent jobs and suggested that the step would translate into an approximately 10 per cent gain in earnings per share.
The company currently employs more than 91,000 people worldwide and hence a reduction of 10% would mean job cuts to the tune of 9,000.
A Microsoft India spokesperson however dismissed the rumors completely. "It's totally a speculation; we don't want to make any comment on that. Moreover, the said blog has nothing to do with Microsoft and who hosts it is unknown. Since anybody can post comment on such a blog, it will not be right to comment on the issue," the spokeswoman said in a statement
The company will announce its fiscal second quarter results on 22nd of January 2009.
Earlier in October, the company had instituted a hiring freeze in few business divisions including entertainment and devices, which make products such as X-Box and Zune
Companies across the nation have embarked has embarked on a cost-cutting initiative by eliminating jobs and by cutting or delaying capital expenditures. . A total of 1.9 million Americans have been rendered jobless this year through November. The unemployment rate, which currently stands at 6.7%, is forecast by many economists to rise above 8%.
Few experts have pointed out that the recession has finally reached Silicon Valley as well. Rival web company Yahoo (NASDA: YAHOO) has laid off a total of 15000 employees globally.
On Wednesday, shares of Microsoft Corporation rose 28 cents or 1.45% to $19.62 in afternoon session.
Disclosure: Author does not own any of the stocks discussed here.
