Microsoft Announces Q2 Results, 5,000 Layoffs

Microsoft announced its fiscal second quarter results today, as well as 5,000 layoffs over the course of the next 18 months with 1,400 immediately. The rumors were true, though the numbers are less than anticipated. From the press release:

As part of this plan, Microsoft will eliminate up to 5,000 jobs in R&D, marketing, sales, finance, legal, HR, and IT over the next 18 months, including 1,400 jobs today. These initiatives will reduce the company’s annual operating expense run rate by approximately $1.5 billion and reduce fiscal year 2009 capital expenditures by $700 million.

Other highlights from the press release include:

• Quarterly revenues of $16.63 billion for the second quarter ended Dec. 31, 2008, a 2 percent increase over the same period of the prior year.
• Net income was $4.17 billion, which was 11 percent lower than the same period a year ago.

The weak PC market and the popularity of netbooks apparently hit Redmond’s results. However Xbox sales reached a record 6 million units. Apparently overall revenues were a whopping $900 million less than what Microsoft had expected a few months ago.

Online Services revenues were completely flat vs. a year ago, while losses grew. However online advertising (search & display) was up 7 percent according to an associated SEC filing. Search wasn’t broken out in particular.

AllThingsD provides Microsoft CEO Steve Ballmer’s full memo to employees about the layoffs, which includes discussion of other cost-saving measures the company is taking.

There is more discussion and additional details on Techmeme.

Postscript by Matt, Jan. 23: The New York Times adds more from Ballmer about Microsoft’s search-related plans, including the possibility of adding more jobs in that area:

Despite the job cuts, Mr. Ballmer said Microsoft would continue to invest in online search and other areas. “Even as we take out 5,000 jobs, we will also add a few thousands jobs back into areas like search where we continue to see incredible opportunity to do good work,” Mr. Ballmer said.