Microsoft planning big layoffs for January?

The latest rumor puts the possible job cuts at 15,000, or nearly 17 percent of Microsoft's worldwide operations, with MSN getting hit hard.

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Jon Skillings is an editorial director at CNET, where he's worked since 2000. A born browser of dictionaries, he honed his language skills as a US Army linguist (Polish and German) before diving into editing for tech publications -- including at PC Week and the IDG News Service -- back when the web was just getting under way, and even a little before. For CNET, he's written on topics from GPS, AI and 5G to James Bond, aircraft, astronauts, brass instruments and music streaming services.
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Jon Skillings
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Mark January 15 in your calendar: Rumors of layoffs at Microsoft peg that as the day the bad news will come.

The latest to report on the possibility of layoffs at the software giant is the blog Fudzilla, which puts the number of job cuts at 15,000, or nearly 17 percent of Microsoft's worldwide operations. The January 15 date is a week before Microsoft's second-quarter earnings report, scheduled for January 22.

Microsoft also has a briefing for financial analysts planned for January 8 at the Consumer Electronics Show in Las Vegas, with the headliner listed as Robbie Bach, president of the entertainment and devices division.

MSN logo

Those purported layoff numbers are up from earlier rumors, which suggested that 10 percent of the company's employees would lose their jobs.

Fudzilla sees the biggest hit coming for the MSN unit, where Yusuf Mehdi recently took over as marketing chief while the company continued to look for an executive to run its overall online services group:

So far, we haven't managed to confirm what departments or regions will be hit the worst, but we're hearing that MSN might be carrying the brunt of the layoffs. We're also hearing rumors about the possibility of somewhat larger staff cuts at Microsoft EMEA (Europe, Middle East and Africa).

It's unlikely that Microsoft will be laying off a lot of people in departments and regions that are doing well, and considering the recent upturn in console sales, we have a feeling that at least most of the people working in the Xbox 360 departments will be pretty safe.

Wall Street veteran Henry Blodget says the target areas mentioned by Fudzilla make sense, but not the high volume of job cuts:

Unless Microsoft's business has been absolutely crushed in the past two months, there is no reason for the company to suddenly cut this much cost. Microsoft's margins are still fine, and much of its revenue is generated from multi-year contracts (and is therefore unlikely to see a massive intra-quarter hit).

In October, word leaked out of Microsoft that it would be closing its MSN Groups service on February 21, to be replaced with Windows Live Groups.

Blodget sees potential for a restructuring in Redmond that would fit into the long-running, on-again-off-again Microhoo saga:

The only way we could see Microsoft laying off this many people is if the company decided to eliminate business units. And if Microsoft did decide to restructure its business, it would likely sell rather than shut down divisions, including MSN (If Microsoft wants to get out of the consumer Internet business, which it should, the best way to do it is to spin its online operations into Yahoo in exchange for a big piece of the company.)