Where will Microsoft cut?

With Microsoft expected to announce layoffs and other expense cuts shortly, Redmond watchers are looking everywhere for clues to where the software maker plans to trim.

Ina Fried Former Staff writer, CNET News
During her years at CNET News, Ina Fried changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley.
Ina Fried
2 min read

It's not just Steve Ballmer who is searching Microsoft to look for potential areas to cut.

Now, reporters are getting in on the act.

Diet Cherry Coke
All of those free sodas add up. According to the Seattle Post-Intelligencer, Microsoft spends $20 million a year to provide free beverages to workers. Coca-Cola

The Seattle Post-Intelligencer has an interesting piece up adding up the cost of a number of employee perks. The paper reports that Microsoft isn't necessarily planning to cut the morale-boosters, but says it has seen a PowerPoint presentation that calculates their cost.

All those free sodas, juices, and cartons of milk, for example, cost Microsoft $20 million a year. The shuttle that takes Microsoft workers from building to building around its campus costs $14 million, while its relatively new Connector bus service, which transports workers to Microsoft from other places in the Seattle area, generates a $13 million annual tab.

However, the Seattle paper reported that Microsoft Chief Financial Officer Chris Liddell vetoed a plan to cut back on such employee perks.

In another article, the paper looks at the fact that Microsoft is cutting back on its building expansion plans and has a number of leases throughout the Puget Sound area that it doesn't look to renew.

Of course, all this is secondary to what are expected to be the first companywide layoffs in Microsoft's history--a move that could be announced as early as this week. (Microsoft reports earnings on Thursday.)

Some reports have speculated that the company could cut as many as 17,000 jobs from its 95,000-strong workforce. I've heard that the cuts could be significantly less than even the 10 percent figure that some analysts suggested might be in the offing.

Ballmer didn't confirm the company was planning layoffs in an interview at the Consumer Electronics Show, but indicated that the company is facing an economic situation worse than any other.

"The fact of the matter is, this is not a downturn, this is a bit of a reset," Ballmer said. "Those are quite different and we're trying to really suss through what we think that means for us."

Microsoft has cut jobs, on occasion, in a particular area or product group, but significant cuts across the company would be a first.

On Monday, Microsoft confirmed the plans to delay expansion, but declined to comment on other areas it might cut.

"Like any well-managed business, we routinely check our assumptions and planning needs against our assessment of the economic environment," Microsoft spokesman Lou Gellos said in an e-mail. "As part of this process, which we undertake quarterly, we look at many scenarios and options."

Gellos said he can confirm "that as some leases expire, we will not renew them."

"It was our plan all along to move the people in many of those buildings to the new construction that is nearing completion on campus and in Bellevue, and to our Westlake/Terry facility in Seattle," Gellos said. "In light of the economic situation, we will also delay some planned construction on the north part of our campus."