BREAKING NEWS: Microsoft this morning announced earnings well below its previous estimates and said it will be cutting 5,000 jobs over the next 18 months to adjust to the new economic reality, including 1,400 positions today. The company isn't saying how many of the cuts will come in the Seattle region.

The company said in a news release that the cuts will be made across research and development, marketing, sales, finance, legal, human resources and the information-technology department. As part of the announcement, the company took the unusual step of withdrawing its previous earnings forecast, saying it can't predict results accurately because of market volatility.

“Economic activity and IT spend slowed beyond our expectations in the quarter, and we acted quickly to reduce our cost structure and mitigate its impact,” said Chris Liddell, Microsoft's finance chief, in the release. “We are planning for economic uncertainty to continue through the remainder of the fiscal year, almost certainly leading to lower revenue and earnings for the second half relative to the previous year."

Shares are down about 7 percent on the news in early trading.

Update, 6:45 a.m: Microsoft's revenues were $16.6 billion for the quarter. That was a 2 percent increase over the same quarter last year, but about $900 million less than the company's earlier expectations. Trying to shore up its bottom line, Microsoft cut operating expenses by $600 million in the second quarter, Microsoft CEO Steve Ballmer said in an email to employees.

Despite that, earnings per share came in at 47 cents, compared with the 51 to 53 cents the company previously projected.

"The decision to eliminate jobs is a very difficult one," Ballmer wrote. "Our people are the foundation of everything we have achieved and we place the highest value on the commitment and hard work that you have dedicated to building this company. But we believe these job eliminations are crucial to our ability to adjust the company’s cost structure so that we have the resources to drive future profitable growth."