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PC sales slump to bite even Microsoft

The software maker is expected to cut financial outlook, jobs when it reports earnings after the markets close on Thursday.

With the PC market tanking along with the rest of the economy, Microsoft is seen as unlikely to be able to live up to the financial forecast it issued in October.

The company is set to release its quarterly earnings after the markets close on Thursday.

In a further sign of just how rough the economy is, Microsoft is also expected to announce shortly its plans for a significant, companywide layoffs. Although Microsoft has cut jobs in a particular unit or location in the past, it has managed to navigate through all past downturns without having to resort to such broad job cuts.

But as CEO Steve Ballmer told CNET News earlier this month, this is no ordinary downturn.


Previewing Microsoft earnings
Ina Fried talks with CNET editor Jennifer Guevin about where Microsoft is likely to make cuts and what to expect on their earnings call Thursday.
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"The fact of the matter is, this is not a downturn, this is a bit of a reset," he said in an interview at the Consumer Electronics Show in Las Vegas. "Those are quite different and we're trying to really suss through what we think that means for us."

There has been much speculation over just what that "sussing" will result in, with expectations ranging from no full-time job cuts to one report that suggested the software maker could trim as many as 17,000 workers from its 95,000-strong payroll. More recently, analysts and others have suggested Microsoft might cut several thousand workers, but stop short of layoffs that would add up to double digits.

Fears were heightened this week as Microsoft workers found themselves unable to access an online tool, known as Headtrax, that provides a company organizational chart. An error message said that the tool was unavailable but scheduled to be operational by Friday.

As for the financial results themselves, Microsoft had projected in October that it would manage per-share earnings of 51 cents to 53 cents per share, with revenue in the range of $17.3 billion to $17.8 billion.

Analysts are now forecasting results more along the lines of $17.1 billion, with per-share earnings of 49 cents, according to Thomson Reuters.

For the current quarter, which stretches through March, analysts are projecting earnings of 48 cents per share, although estimates vary from 42 cents to 52 cents, again according to Thomson Reuters. Revenue for the period is pegged at $15.1 billion.