Microsoft should have made deeper cuts, analysts contend |
Connect with TechFlash on our Facebook page for all the latest technology news headlines and commentary, plus information and access to special events, photos from events, promotions and more.
Today On Techflash
Mass High Tech
- Microsoft Build: Windows 8 preview a hit, but are investors unhappy?
- Build an app in a day at Mobile App Hackathon
- Beefed-up Skype for Windows; Indie author joins Amazon's 'Kindle Million Club'
- Only solution to Xbox 360 update error is new console
- Ballmer: Windows Phone update 'Mango' has over 500 new features
Microsoft should have made deeper cuts, analysts contend
The unprecedented layoffs and other cutbacks announced yesterday by Microsoft haven't appeased Wall Street. Microsoft shares are down more than 6 percent since the news came out, and some analysts assert that the company needed to go much further.
"We believe the negative stock reaction may have had more to do with a head-fake regarding expense control than the weak results," JP Morgan analyst John DiFucci wrote. "Management discussed the need to concentrate on running the organization more efficiently through expense reductions, but net/net, there were none. Operating expenses will increase in the second half from a year ago."
That sentiment was echoed by Sid Parakh, an analyst with McAdams Wright Ragen in Seattle. The company does expect to cut operating expenses (excluding cost of goods) this fiscal year by $1.5 billion from its previous plan. However, Parakh noted that its estimated fiscal year operating expenses of $27.4 billion mean that second-half spending will be more than $14 billion -- up from the roughly $13 billion in operating expenses reported by the company in the first half of the fiscal year.
"While the cost cuts are prudent and required, they do not appear to go far enough, we believe," Parakh wrote in a report.
He noted that the company announced layoffs "up to" 5,000 people over the next 18 months, which means it could be less than that amount. Microsoft said yesterday that it will make 1,400 job cuts immediately. About 870 of those initial job cuts will be in the Seattle region, according to a filing the company made with the state Employment Security Department.
The numbers don't count the company's contract work force, which is expected to be significantly reduced, as well.
But Microsoft says it will also keep hiring in some areas, such as Internet search, resulting in a net loss of direct employment of 2,000 to 3,000 employees worldwide over the next 18 months. As we noted yesterday, that will take the company back to the employment level it saw in July of last year.
If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.
TechFlash Team
Recent Sponsor Posts
Who's creating today's energy efficient buildings? Find out at the BetterBricks Awards, Feb. 16
BetterBricks Awards salute the individuals leading the way for high performance commercial buildings with an emphasis on energy efficiency. Join us as we recognize these standout green building professionals.
Award categories include: Advocate; Architect/Designer; Facility Manager/Operator; and Owner/Developer.
Keynote Speaker: Kevin Kampschroer, Director of U.S. GSA's Office of Federal High Performance Buildings. Kevin leads the U.S. General Services Administration's efforts in building sustainability and accelerating industry adoption of sustainable principles across all aspects of a building's life.
Register here by February 10!
If you are interested in buying a table, email Monica Alquist or call her at 206-876-5404.
The Triple Door Presents: The Atomic Bombshells "J'ADORE!: A Burlesque Valentine"
Seattle's reigning Burlesque super-troupe delivers a gorgeous and glittering VALENTINE featuring some of the Bombshells' most exhilarating acts to date. J'Adore! promises to celebrate l'amour with good humor, style, and a healthy dose of dazzle! Bring a friend, a lover, a family member, or a secret crush, and celebrate with the Valentine's Burlesque spectacular that will leave you shouting: "J'ADORE......The Atomic Bombshells!" The incomparable Jasper McCann emcees with high style and charm.
Please visit www.thetripledoor.net for a full schedule of future performances.
The Triple Door Presents: Bob Mould – See A Little Light: An Evening of Reading and Music
"Bob Mould. Those two words are synonymous with integrity. From Husker Du in the last century to right at this moment, Bob is the real deal, writing and playing music for music's sake. He's a great songwriter and performer. I have been a fan of Bob's for thirty years now with no end in sight." -Henry Rollins
Please visit www.thetripledoor.net for a full schedule of future performances.
Why Choose BDO for your SOC (previously SAS 70) Reports?
BDO’s experience in providing attestation services (SAS 70/SSAE 16, AT 101, AT 201, AT 601, etc.) to a broad range of industries, and our team of skilled professionals distinctly qualifies us to serve as your company’s Service Auditor. By leveraging the BDO global network of control specialists, we are poised to provide global services in more than 1,000 offices and across 119 countries. Many organizations find that investing in reports on controls may result in benefits, including:
• Increased client confidence
• Improved competitive advantage
• Minimization of frequent audits
• Streamlined business processes and controls
• Enhanced risk management
For detailed information contact Paul Martini at pmartini@bdo.com.
