Analyst: Zune phone unlikely, but 10% Microsoft layoffs 'reasonable' |
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Analyst: Zune phone unlikely, but 10% Microsoft layoffs 'reasonable'
Goldman Sachs analyst Sarah Friar this morning weighed in on the two biggest rumors swirling around Microsoft recently: Will there be a Zune phone announcement at the Consumer Electronics Show? And will the company make substantial cuts in its workforce?
Regarding the Zune phone, she wrote, the answer is probably not. (That's consistent with what we're hearing.) However, Goldman Sachs believes the Redmond company is likely to reduce its headcount. Here's an excerpt from Friar's note to clients, explaining the logic and the potential impact on Microsoft earnings.
More broadly for Microsoft, industry analysts have begun to speculate on whether or not the company is about to announce a significant reduction in force - in the 10%-17% range. In our view, the company is likely to cut heads - most other large IT companies are already doing so - so a cut in 10% range seems reasonable and, in our view, good for the shares. Our rough analysis suggests a 10% headcount reduction corresponds to about a 7% reduction in op ex, or approximately an incremental 20c to FY2010 estimates."
Earlier: Reality check on Microsoft layoffs
About Todd Bishop
Todd Bishop is co-founder and managing editor of TechFlash. He has covered Microsoft and the technology industry for more than five years, most recently as a daily newspaper reporter and blogger based in Seattle.
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