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

“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

“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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