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Jan 7, 2009

Microsoft 15,000 lay-off rumours "grossly exaggerated"

A new report has challenged reports that Microsoft is preparing to make significant redundancies across its workforce, instead claiming that the Xbox manufacturer has other cost-cutting measures in mind.

Rather than the rumoured 15,000 redundancies, CNBC claims that the company will instead be cutting its outgoings through "attrition and the non-renewal of contract employees, rather than through a rumoured sweeping layoff".

Microsoft has apparently said the speculation around the rumoured lay-offs have been "grossly exaggerated".

However cuts are rumoured to have already begun, with 180 contract workers supposedly informed a month ago that their services would not be required in 2009.

Still, that's much fewer than the original number suggested by the rumours. Interestingly, the two blogs at the centre of these redundancy whispers have now changed their initial story and stated that the lay-offs could well come from Microsoft's "agency staff", or contractors.

CNBC’s source has claimed that Microsoft had considered aggressive money-saving strategies, but that while these plans may still come to fruition in the future, the company is keen to reduce costs in other ways.

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Reports from the US suggest that Microsoft is preparing to make as many as 15,000 employees of its 90,000 strong workforce redundant.

It is thought that between 10 and 17% of both the company's full-time and contracted employees are to be axed, with rumours stating that the cut will be made on 15 January - a week before Microsoft releases its Q2 earnings results.

The staff cuts are expected to come from the EMEA region, and a 10% reduction in its staff could apparently save the company $1.2 billion (around £826 million) a year.

"The prevailing wisdom on Microsoft is that the company may pre-announce disappointing December results", said Brad Reback, analyst at Oppenheimer & Co.

"Should such headcount reductions materialise, we would view them as a positive sign that management is interested in preserving the company's operating margin structure through the downturn".

Gamers and employees of Microsoft's entertainment division probably need not worry - the Xbox 360 side of the business has been maintaining profitability recently.

Just last month, Microsoft's big rival Sony announced it had plans to cut 8000 jobs by 2010 due to the economic squeeze, although David Reeves stressed that the games department in Europe was not planning any redundancies.

Source : GamesDog GamesDog
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