REDMOND, Wash. — Microsoft will make the first mass layoffs in its 34-year history, cutting 5,000 jobs as demand for personal computers falls and even one of the world’s richest companies gets burned by the recession.
The company announced the cuts Thursday as it reported an 11 percent drop in second-quarter profit, which fell short of Wall Street’s expectations. Microsoft shares plunged more than 11 percent.
“We’re certainly in the midst of a once-in-a-lifetime set of economic conditions,” chief executive Steve Ballmer said during a conference call.
With less access to credit, businesses and consumers are spending less and stretching the life span of their existing computers.
The biggest names in the technology sector have been no stranger to layoffs lately. Giants such as chipmaker Intel and even Google are among the companies that have pulled back on jobs to hunker down in the recession.
Microsoft, which has $20.7 billion in cash on hand, said its business prospects were hurt by the deteriorating global economy and lower revenue from software for PCs. The holiday quarter of 2008 was the worst for the PC market since 2002, with computer shipments declining about a half of 1 percent, according to IDC, a technology research group.
The software maker won’t stop hiring entirely. During the conference call, Ballmer said the company will add new jobs in the next 18 months to support key areas, including Web search, so the total number of employees will drop by 2,000 to 3,000.
Microsoft employs 94,000 people overall.
