January 22, 2009, 8:34 PM — Microsoft Corp. is laying off employees in the divisions that make its Zune music player , Microsoft Office software, and Live Search site, but not in the group preparing its Windows 7 operating system, according to anonymous postings Thursday by purported Microsoft employees.
At the popular Mini-Microsoft blog, alleged former, current and just-laid-off employees of the software maker shared information about the layoffs, of which 1,400 are to be announced by the end of Thursday.
"Well I got the The Meeting this morning when I came in," wrote one anonymous poster. "I've been a dev here for 6 years and I'm in the mid-70% category and my managers and HR relation assured me that this was not related to my reviews.
"I am just unlucky to be completely new in this team so I knew I was in a volatile position already," the poster continued. "The package is decent - I'll essentially get full pay and benefits for six months incl. the 60 days of internal job seeking."
Five thousand jobs will eventually be cut from Microsoft's workforce of 96,000, which has grown quickly in recently years due to acquisitions and hiring. But Microsoft plans to continue to hire, meaning that the net job reduction over the next 18 months will be between 2,000 and 3,000 jobs.
In its announcement Thursday, Microsoft said it plans to cut jobs in research and development, marketing, sales, finance, legal, human resources and IT over the next 18 months.
A Microsoft spokeswoman declined to comment on the postings at Mini-Microsoft.
"What I can tell you is that the majority of individuals impacted by today's job eliminations are being notified today," she said, with some employees outside of the U.S. potentially hearing Friday in their local time.
Some posters at Mini-Microsoft claimed that Microsoft's Entertainment and Devices division is being hit hard by layoffs. E&D makes the Xbox 360 game console, the Windows Mobile operating system and the Zune music player.
According to second-quarter earnings released Thursday, E&D's operating income fell 60% to US$151 million, dragged down by a $100 million drop in the sale of Zune music players. Sales of Xbox 360 consoles, however, grew strongly, helping lift revenue 3% to $3.18 billion.
Cuts were also reported in the Microsoft Business Division, which sells the popular Office suite as well as its Dynamics CRM software, the Online Services Business which runs the struggling Live Search site, and the Global Foundation Services, which runs all of Microsoft's Web services, such as MSN and Windows Live.
However, layoffs will not occur within the Windows development team run by Steven Sinofsky, said one anonymous poster. The team is rapidly preparing Windows 7, the successor to Windows Vista , for release potentially later this year.
The Windows client division, which sells Vista and XP, saw revenues fall 8% in the second quarter, due to weak PC sales.
Layoffs include both those judged by their Microsoft manager to be poor performers, also called the bottom "ten percenters," as well as those who were working on products, services or features that were cut, according to reports.
One poster claimed to have been let go after eight years at Microsoft despite positive reviews in the past.
"Not sure what they use as criteria for laying people off, since I'm new to the group that I'm in," the poster wrote. "However, it seems bogus to me that they don't look at your track record."
The spokeswoman said that "every division is assessing its portfolio and prioritizing investments based on the best opportunities in the current economic environment."
Those laid-off for poor performance will lose access to Microsoft's network by Friday, while those whose jobs were eliminated for other reasons are being given 60 days to find another job within Microsoft, according to reports.
"Severance benefits will be available to impacted individuals," the spokeswoman said. "While the specific severance benefits will vary by country, impacted employees in the U.S. may be eligible for a minimum of 60 days of pay, as well as severance pay that is calculated on tenure and level."
During its conference call earlier today, Microsoft said it would also cut the number of contractors by as much as 15%. The spokeswoman declined to say how many contractors Microsoft has now.