Microsoft Corp. said Thursday it is cutting 5,000 jobs over the next 18 months -- more than 5 percent of its work force -- a sign of how badly even the biggest and richest companies are being stung by the recession.
The layoffs appear to be a first for Microsoft, which was founded in 1975, aside from relatively limited staff cuts the software company made after acquiring companies.
The company announced the cuts as it reported an 11 percent drop in second-quarter profit, which fell short of Wall Street's expectations. Microsoft shares plunged 8 percent in morning trading.
The biggest names in the technology sector have been no stranger to layoffs lately. Giants such as chip maker Intel Corp. and even Google Inc. are among the companies that have pulled back on jobs to hunker down in the recession.
Even with $20.7 billion in cash on hand, Microsoft said its business prospects were hurt by the deteriorating global economy and lower revenue from software for PCs. The holiday quarter of 2008 was the worst the PC market had seen since 2002, with computer shipments declining about a half of 1 percent, according to IDC, a technology research group.
Making matters worse, the one type of PC consumers have warmed to in tight times -- the low-cost, low-power "netbook" -- actually cut further into Microsoft's earnings. The tiny portable computers run on Windows XP, which is older and less profitable for Microsoft than Windows Vista.
In a memo to employees, Chief Executive Steve Ballmer acknowledged that Microsoft is "not immune to the effects of the economy. Consumers and businesses have reined in spending, which is affecting PC shipments and IT (information technology) expenditures."
Ballmer said Microsoft cut operating expenses by $600 million in the quarter, but that it wasn't enough.
The layoffs, starting with 1,400 on Thursday, will affect workers in research and development, marketing, sales, finance, legal and corporate affairs, human resources and information technology, and mostly in Redmond, Wash., where the company is based. Ballmer also said changes would occur in departments that handle support, consulting, operations, billing, manufacturing, and data center operations, but he did not say whether layoffs are planned in those cases.
Microsoft won't stop hiring entirely. Ballmer said the company will add new jobs to support "key investment areas" over the next 18 months, so the total number of employees will drop by 2,000 to 3,000. Microsoft employs 94,000 people overall.
"I would have expected a more aggressive cut," said Cowen and Co. analyst Walter Pritchard. "They're trying to have their cake and eat it too, in terms of not cutting and hoping to have everything they were going to have before."
The software maker is trimming costs for travel, contractors and vendors, and said it will scale back a massive expansion to its Redmond campus.
Microsoft said its job cuts will reduce operating costs by $1.5 billion as it prepares for lower revenue and earnings in the second half of the year. The company says it is unable to offer profit and revenue guidance for the rest of the year, because of the market volatility.
Microsoft said profit in the last quarter fell to $4.17 billion, or 47 cents per share, from year-ago earnings of $4.71 billion, or 50 cents per share.
Total revenue edged up 2 percent to $16.63 billion.
The results missed Wall Street's forecast for earnings of 49 cents per share on sales of $17.08 billion.
Microsoft makes most of its profits on sales of the Windows operating system and its Office package of software, which includes programs such as Word, PowerPoint and Excel. Revenue and earnings shrank in both of those divisions.
A bright spot for Microsoft is software for corporate server computers, where revenue is still rising. Gartner analyst Neil MacDonald noted that the server business can thrive in a downturn because back-office software can help companies improve efficiency and save money.
Agencies
Thursday, January 22, 2009
Wednesday, January 21, 2009
TCS may go slow on lateral hiring
The country's largest software company, Tata Consultancy Services (TCS), plans to go slow on lateral hiring. According to a report in a leading business daily, faced with the current tough business environment, TCS will be focusing more on trainees.
The company, however, is not planning any freeze on salary hike, though it said that the next year's salary hike would be in single digit per cent range.
TCS has been very controlled about the numbers that we take from here. The focus is on trainees as from cost management perspective this will balance out, said, Ajoy Mukherjee, VP and head, global HR, TCS, in the report.
TCS which reported net additions of 8,692 employees in third quarter, the highest in any of the last five quarters, however, assured that it will honour its commitment on hiring 24,800 people during financial year 2009-10.
Mukherjee added that while I am not saying that we will not hire experienced people, but it will be based more on domain expertise and business need. Besides, for off-campus recruitment, which we did in the fourth quarter to fill on gaps due to attrition, is also clearly ruled out this year. The other focus area also is shift from onsite to offshore.
Further, despite troubles in the US economy, TCS reported a robust 32 percent Y-o-Y growth in business in the region with 320 bps improvement in operating margin at 33.4 per cent in the just ended third quarter. Growth in the European market was lower at 23.4 per cent and came on 180 bps lower margin of 29.2 per cent.
TCS, however, reported lower utilisation rate including trainees during the OND quarter. The company's utilisation rate fell from 74.7 percent in the last quarter to 71. per cent.
Agencies
The company, however, is not planning any freeze on salary hike, though it said that the next year's salary hike would be in single digit per cent range.
TCS has been very controlled about the numbers that we take from here. The focus is on trainees as from cost management perspective this will balance out, said, Ajoy Mukherjee, VP and head, global HR, TCS, in the report.
TCS which reported net additions of 8,692 employees in third quarter, the highest in any of the last five quarters, however, assured that it will honour its commitment on hiring 24,800 people during financial year 2009-10.
Mukherjee added that while I am not saying that we will not hire experienced people, but it will be based more on domain expertise and business need. Besides, for off-campus recruitment, which we did in the fourth quarter to fill on gaps due to attrition, is also clearly ruled out this year. The other focus area also is shift from onsite to offshore.
Further, despite troubles in the US economy, TCS reported a robust 32 percent Y-o-Y growth in business in the region with 320 bps improvement in operating margin at 33.4 per cent in the just ended third quarter. Growth in the European market was lower at 23.4 per cent and came on 180 bps lower margin of 29.2 per cent.
TCS, however, reported lower utilisation rate including trainees during the OND quarter. The company's utilisation rate fell from 74.7 percent in the last quarter to 71. per cent.
Agencies
Tuesday, January 20, 2009
Mobile players focus on MVAS to increase ARPU
With Mobile Value Added Services (MVAS) touching Rs 7,510 crore in 2008 and expected to touch Rs 9,760 crore in 2009 and Rs 16,520 by 2010, mobile players are aggressively rolling out new services to increase the average revenue per user (ARPU).
Talking to CXOtoday at the Forum Nokia Developer Conference 2009, Deepak Halan, Group Business Director of IMRB International eTech said, “In the wake of changing industry markets, telecom operators are looking at MVAS as the next wave of growth, and a large chunk of revenues is expected to flow from VAS in the near future. Our report indicated that this market is growing at 70% annually.”
While the growing subscriber base has positively impacted industry revenues, operator margins have shrunk, pulling down ARPU. “As ARPU declines and voice gets commoditized, the challenge is to retain customers, develop alternative revenue streams, and create a basis for differentiation in high-churn markets that is why telecom operators are looking at MVAS as the next wave of growth,” said Halan.
Presently the mobile market has about 12-15 major players besides a number of new licences issued to Etisalat, Unitech and Reliance (GSM) that is likely to take MVAS to all time high.
Among MVAS, the most popular service was downloaded mobile music, although voice portals were swiftly taking over, said Halan. SMS-based infotainment services are largely divided among the big players. A TRAI reports indicates that out of the 375 million users, one out of every five users have a GPRS-enabled mobile across India but not many services are available making then passive users, which is a deterrent factor.
However, the new 3G initiative give a fresh pipe for data and video tracks that could be downloaded without interruptions and also mobile TV with a lot more services like video on demand will is possible, said Halan.
Srikanth Raju, Director, Head of Product Marketing Forum Nokia said, “MVAS has seen a huge market in India and now with 3G being rolled out, will further help video downloaded and a lot more development on MVAS.”
Talking to CXOtoday at the Forum Nokia Developer Conference 2009, Deepak Halan, Group Business Director of IMRB International eTech said, “In the wake of changing industry markets, telecom operators are looking at MVAS as the next wave of growth, and a large chunk of revenues is expected to flow from VAS in the near future. Our report indicated that this market is growing at 70% annually.”
While the growing subscriber base has positively impacted industry revenues, operator margins have shrunk, pulling down ARPU. “As ARPU declines and voice gets commoditized, the challenge is to retain customers, develop alternative revenue streams, and create a basis for differentiation in high-churn markets that is why telecom operators are looking at MVAS as the next wave of growth,” said Halan.
Presently the mobile market has about 12-15 major players besides a number of new licences issued to Etisalat, Unitech and Reliance (GSM) that is likely to take MVAS to all time high.
Among MVAS, the most popular service was downloaded mobile music, although voice portals were swiftly taking over, said Halan. SMS-based infotainment services are largely divided among the big players. A TRAI reports indicates that out of the 375 million users, one out of every five users have a GPRS-enabled mobile across India but not many services are available making then passive users, which is a deterrent factor.
However, the new 3G initiative give a fresh pipe for data and video tracks that could be downloaded without interruptions and also mobile TV with a lot more services like video on demand will is possible, said Halan.
Srikanth Raju, Director, Head of Product Marketing Forum Nokia said, “MVAS has seen a huge market in India and now with 3G being rolled out, will further help video downloaded and a lot more development on MVAS.”
Monday, January 19, 2009
Computer sales across Asia drop
Sales of computers in the Asia Pacific region outside Japan fell for the first time in a decade during the fourth quarter, as the global meltdown hit consumer spending, a study said on Monday.
Preliminary figures showed 17.2 million desktop computers and laptops were sold in the December quarter, down 14 per cent from the previous quarter and 5 per cent lower than a year ago, global market intelligence firm IDC said.
The figures marked the first year-on-year decline since the third quarter of 1998 when the region was grappling with the Asian financial crisis, it added.
"This quarter was quite a jaw-dropper" not just in China but also in India, said Bryan Ma, regional director for personal systems research with IDC.
"The clouds are darkening in 2009, although there might be some pockets of shelter in the region's public sector."
For 2008, struggling Chinese computer giant Lenovo was the region's number one vendor with market share of 18.3 percent, followed by US rival Hewlett Packard which had 14.1 per cent, and Dell at 9.1 per cent, IDC said.
Taiwanese computer firm Acer was fourth with market share of 7.5 per cent and China's Founder ranked fifth, with 4.0 per cent.
Agencies
Preliminary figures showed 17.2 million desktop computers and laptops were sold in the December quarter, down 14 per cent from the previous quarter and 5 per cent lower than a year ago, global market intelligence firm IDC said.
The figures marked the first year-on-year decline since the third quarter of 1998 when the region was grappling with the Asian financial crisis, it added.
"This quarter was quite a jaw-dropper" not just in China but also in India, said Bryan Ma, regional director for personal systems research with IDC.
"The clouds are darkening in 2009, although there might be some pockets of shelter in the region's public sector."
For 2008, struggling Chinese computer giant Lenovo was the region's number one vendor with market share of 18.3 percent, followed by US rival Hewlett Packard which had 14.1 per cent, and Dell at 9.1 per cent, IDC said.
Taiwanese computer firm Acer was fourth with market share of 7.5 per cent and China's Founder ranked fifth, with 4.0 per cent.
Agencies
Sunday, January 18, 2009
Will India-born executives bag Obama tech job?
Two prominent India-born executives are the frontrunners for the newly-created post of federal chief technology officer in the incoming Barack Obama Administration.
The two leading candidates are Padmasree Warrior, the chief technology officer (CTO) of Silicon Valley networking giant Cisco Systems and Vivek Kundra, who holds the same title in the government of Washington DC, US financial magazine BusinessWeek today quoted "sources with knowledge of the situation" as saying.
Warrior, who previously was the CTO at Motorola, represents hard-core technology expertise. Kundra, who was named to the DC post in 2007, has held similar government positions in the past and has a reputation for using technology to make government more open and inclusive, the report said.
Neither the Obama transition team nor the two executives would comment on their potential selection.
The President-elect is expected to announce his pick for CTO in a matter of days.
One of the sources told the magazine that the selection is being held up because it is not yet clear how the CTO will interact with the government's chief information officer and with the new cyber-security czar, another position that has not yet been filed.
Agencies
The two leading candidates are Padmasree Warrior, the chief technology officer (CTO) of Silicon Valley networking giant Cisco Systems and Vivek Kundra, who holds the same title in the government of Washington DC, US financial magazine BusinessWeek today quoted "sources with knowledge of the situation" as saying.
Warrior, who previously was the CTO at Motorola, represents hard-core technology expertise. Kundra, who was named to the DC post in 2007, has held similar government positions in the past and has a reputation for using technology to make government more open and inclusive, the report said.
Neither the Obama transition team nor the two executives would comment on their potential selection.
The President-elect is expected to announce his pick for CTO in a matter of days.
One of the sources told the magazine that the selection is being held up because it is not yet clear how the CTO will interact with the government's chief information officer and with the new cyber-security czar, another position that has not yet been filed.
Agencies
India to create 90 million jobs across sectors
The "India Shining" story may be under stress by the ongoing economic crisis, but some sectors and career options still hold promise for job seekers this year, according to human resource experts.
Leading advisory Boston Consulting Group says India will have a demand for 85-90 million people across various sectors, and the majority of the demand will come from high-growth industries like IT, outsourcing, banking, retail and healthcare.
Similarly, a survey by HR consultancy Manpower projects hiring to rise steadily by around 18 per cent from this quarter in many sectors, signifying that jobs in India may not be entirely affected by the financial turmoil in rich nations.
"India poses a far more positive outlook as compared to what has been happening across the world," said Cherian Kuruvila, director operations, Manpower India, adding that seven per cent gross domestic product (GDP) growth for the country showed that the economy remained healthy.
"Employers in the mining and construction industries as also services sector are especially looking to scale up," Kuruvila said, but added that new jobs won't be distributed evenly through all regions and industries.
India has a work force of 484 million people, of which 273 million work in rural areas, 61 million in manufacturing and about 150 million in services, says the Boston Consulting Group that recently conducted a study on the country's services sector.
"Going forward, the Indian economy is likely to be overwhelmingly dependent on the growth of services. More than 70 per cent of India's incremental GDP and 60 per cent of new jobs over the next five years are expected to be generated by services."
A survey across the Asia-Pacific region by TNS, a market research and business analysis firm, with Gallup International, a global human resource consulting firm, also threw up interesting findings.
Sixty-two per cent of the Indians polled felt they would be able to hold on to their jobs in 2009 and the 57 per cent who expected unemployment to rise did not not consider they would be the ones affected.
"It seems, despite the slowdowns and reports of downsizing, there is an overall confidence among the employed in India that 'My job is secure! Difficulties, if any, are for others, not me'," said TNS India executive director Chhavi Bhargava.
Experts concede that the present financial meltdown has raised doubts over the performance of some industries and its impact on salaries and perks, but hope Indian businesses will come out of the slump earlier than their counterparts overseas.
"The impact on salary was felt in 2008 and it may continue till some time. The payouts were significantly lower than the 15-200 per cent bonus payouts in 2007," said Absolute HR Services chief executive Kunal Banerji.
"Gone are the days of experimentation with jobs. I would advise employees not to be adventurous checking different jobs. Stability is the mantra," said Confiar Consultants managing director Vivek Ahuja.
Apart from advising employees to keep their jobs this year, HR consultants also feel these are also the times when people will turn to age old values and ethics and play by the book.
"The old adages like no substitute for hard work and no short-cuts to success are back in vogue," Banerji said. "Stay hungry for work or stay hungry is the mantra for corporate India."
Agencies
Leading advisory Boston Consulting Group says India will have a demand for 85-90 million people across various sectors, and the majority of the demand will come from high-growth industries like IT, outsourcing, banking, retail and healthcare.
Similarly, a survey by HR consultancy Manpower projects hiring to rise steadily by around 18 per cent from this quarter in many sectors, signifying that jobs in India may not be entirely affected by the financial turmoil in rich nations.
"India poses a far more positive outlook as compared to what has been happening across the world," said Cherian Kuruvila, director operations, Manpower India, adding that seven per cent gross domestic product (GDP) growth for the country showed that the economy remained healthy.
"Employers in the mining and construction industries as also services sector are especially looking to scale up," Kuruvila said, but added that new jobs won't be distributed evenly through all regions and industries.
India has a work force of 484 million people, of which 273 million work in rural areas, 61 million in manufacturing and about 150 million in services, says the Boston Consulting Group that recently conducted a study on the country's services sector.
"Going forward, the Indian economy is likely to be overwhelmingly dependent on the growth of services. More than 70 per cent of India's incremental GDP and 60 per cent of new jobs over the next five years are expected to be generated by services."
A survey across the Asia-Pacific region by TNS, a market research and business analysis firm, with Gallup International, a global human resource consulting firm, also threw up interesting findings.
Sixty-two per cent of the Indians polled felt they would be able to hold on to their jobs in 2009 and the 57 per cent who expected unemployment to rise did not not consider they would be the ones affected.
"It seems, despite the slowdowns and reports of downsizing, there is an overall confidence among the employed in India that 'My job is secure! Difficulties, if any, are for others, not me'," said TNS India executive director Chhavi Bhargava.
Experts concede that the present financial meltdown has raised doubts over the performance of some industries and its impact on salaries and perks, but hope Indian businesses will come out of the slump earlier than their counterparts overseas.
"The impact on salary was felt in 2008 and it may continue till some time. The payouts were significantly lower than the 15-200 per cent bonus payouts in 2007," said Absolute HR Services chief executive Kunal Banerji.
"Gone are the days of experimentation with jobs. I would advise employees not to be adventurous checking different jobs. Stability is the mantra," said Confiar Consultants managing director Vivek Ahuja.
Apart from advising employees to keep their jobs this year, HR consultants also feel these are also the times when people will turn to age old values and ethics and play by the book.
"The old adages like no substitute for hard work and no short-cuts to success are back in vogue," Banerji said. "Stay hungry for work or stay hungry is the mantra for corporate India."
Agencies
Saturday, January 17, 2009
Is Microsoft planning massive job cuts in 2009?
Microsoft Corp is considering significant layoffs across its various divisions, The Wall Street Journal reported, citing people familiar with the company's plans.
But plans for the cutbacks have not yet been firmed up and Microsoft could end up finding alternative methods to control costs, the Journal reported on its website.
A Microsoft spokesman declined to comment on layoff rumours. The number of potential job cuts is likely to be far less than the 15,000 positions that have been rumoured in recent weeks, the Journal reported.
Microsoft might announce the job cuts when it reports quarterly earnings next week, the Journal said.
The software giant employs about 91,000 employees globally.
Agencies
But plans for the cutbacks have not yet been firmed up and Microsoft could end up finding alternative methods to control costs, the Journal reported on its website.
A Microsoft spokesman declined to comment on layoff rumours. The number of potential job cuts is likely to be far less than the 15,000 positions that have been rumoured in recent weeks, the Journal reported.
Microsoft might announce the job cuts when it reports quarterly earnings next week, the Journal said.
The software giant employs about 91,000 employees globally.
Agencies
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