The Microsoft water cooler at the Mini-Microsoft blog is rife with rumors of impending layoffs scheduled for January 15, 2009:
Rumors. Microsoft layoff and cut-backs and Reduction In Force rumors. That’s all I have for you. Rumors and second-hand speculation and the comments left by the fine, good-looking folks who participate in the conversation here. So pour yourself some holiday cheer and dive in.
What have those fine folks been sharing over the past couple of posts here? Bad news on the rise and with perhaps January 15th 2009 as an interesting day for Microsoft news. Bad news. 15 Jan is a week before FY09Q2 quarterly results and it’s better to share as much news, good and bad, before the results are released vs. surprising Wall Street (something I think we’ve learned).
It all starts with…
Just heard on the finance grapevine. MSFT layoffs are coming on January 15th.
They are substantial.
Hit the link for much more, but the possibility of layoffs during the current recession shouldn’t be a shocker even at Microsoft. That’s what companies do during recessions, albeit fairly ham handedly at large companies and that’s what Microsoft is these days. As for Microsoft’s overall business, the outlook isn’t particularly grim although being characterized as a "utility stock" must gall Steve Ballmer:
THE MARKET FOR PERSONAL COMPUTERS IN 2009 WILL be much worse than anyone would have expected just a short while back. But that shouldn’t faze Microsoft (ticker: MSFT).
Shares of the world’s largest software company have fallen 46% this year, worse than the 40% drop in the Standard & Poor’s 500 Index, as investors worry about slipping PC sales.
The result: Microsoft has become a substantial value investment.
With a 2.7% dividend yield and a vast commitment to buying back shares, Microsoft stock is no longer a bet on the PC. More and more, it looks like the stable utility stock of the digital age.
Indeed, the Redmond, Wash.-based giant’s dividend has a better yield than the 10-year Treasury note’s 2.1%. And the company is not likely to disappear from the planet anytime soon.
As long as PCs are sold, in whatever volume, Microsoft continues to be a tax, so-to-speak, on those PCs purchases.
True, the global economic slump continues to humble estimates for how many machines will be sold. But even a worst-case scenario — one in which sales of Windows and other products, such as the Exchange e-mail server, were to decline 10% in 2009 — would probably still generate earnings of $1.90 per share in the 12 months ending in December of 2009, compared with perhaps $1.91 for this calendar year, estimates Cowen’s Pritchard.
That’s analyst Walter Pritchard with Cowen & Co. and whether or not you agree with his exact estimate, Microsoft is not going to be applying for a Washington "bailout" any time soon.