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MSNBC: Microsoft to cut costs, not salaries; New priorities in face of profit shortfall

Dec 23, 2000, 16:36 (10 Talkback[s])
(Other stories by Rebecca Buckman)

"Microsoft Corp., reeling from slower-than-expected sales of its core products, plans to cut costs throughout its businesses even as it boosts some employees' salaries to make sure they don't jump ship."

"Steve Ballmer, Microsoft's chief executive, has asked all his top executives to "significantly reduce" some expenditures budgeted for the fiscal year. In a seven-page memo sent to employees late last week, he wrote: "We all have a big incentive as shareholders to reignite the kind of cost-conscious culture that marked Microsoft's earlier years."

"It was the first early profit warning from Microsoft since 1989, and sent rumors that the company would depart from history even more dramatically by announcing a major layoff. In his memo, Mr. Ballmer rejected that possibility. "To be clear, resource reductions don't translate into employee layoffs," he wrote, though adding that the company will "reduce unfilled head count."

"Securities analysts have been even less upbeat lately, at least for the short term. In a research note issued Friday, after Microsoft's profit warning, Goldman, Sachs & Co. analyst Rick Sherlund said he looks for "very little, if any, earnings growth over the next year." He added that he "was not certain" that Whistler or Office 10 "will be any more compelling catalysts."

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