A scene from Microsoft's 2006 company picnic. (Flickr photo, jeffwilcox)

Microsoft's annual company picnic, held in a picturesque setting in North Bend, Wash., has been canceled as part of the company's effort to reduce costs in the face of the difficult economy. A spokesman confirmed the news, which was first reported by Ina Fried of CNet News.com. Microsoft employees were informed of the decision today.

"The big reason is to pay attention to costs," said Lou Gellos, a Microsoft spokesman.

The summertime event drew thousands of Microsoft employees and their families. The company employs more than 41,000 people in the Seattle region, following recent layoffs. Gellos confirmed that the company will continue to hold its annual employee meeting, which has been staged in the fall at Safeco Field in recent years.

Microsoft isn't saying how much the picnic cost, but pictures from past events make it clear that this was not exactly an exercise in austerity.

Reflecting the bad economy, Microsoft yesterday reported the first year-over-year quarterly revenue decline in its history, 6 percent. Earnings per share were down 30 percent from the same quarter a year ago. Chris Liddell, Microsoft's chief financial officer, told analysts that Microsoft would cut costs by an additional $1 billion in the current fiscal year, beyond the cost savings previously expected.