Is Microsoft Planning Its First-Ever Layoffs?

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With the economy in the tank and other major firms planning massive cutbacks, rumors have been swirling for several weeks that Microsoft plans big layoffs of its own to be announced on or about Jan. 15.

How big? As much as 10 to 17 percent of the company’s employees, if you believe the buzz.

If true, the cuts would be the first “official” layoffs in Microsoft’s history — blunting a point that the company has always pointed to as a matter of pride.

Despite one Web site’s claims that the layoffs are now “fact,” however, no one seems to be able to substantiate the rumors. That may make for a lot of Microsoft employees lying awake at night after tonight’s champagne wears off.

Microsoft (NASDAQ: MSFT) officials were mum on the rumors.

“Regarding any potential layoffs, Microsoft does not comment on rumors or speculation,” a company spokesperson said in an e-mail to InternetNews.com.

Yet this week, blog site Fudzilla proclaimed that the rumors are true.

“The rumor that Microsoft was set to lay off people on January 15th, 2009 is no longer a rumor but a fact,” a Fudzilla post said on Dec. 30. “Staff at Microsoft have been informed that the company is readying major layoffs to its worldwide operations and it’s not a small cut, either,” the post continued.

One problem is that, at this point, there is no way to verify whether layoffs will be announced or not. Neither does anyone seem to have any support so far for the rumors that cuts at Microsoft could range between 10 percent and 17 percent of the software titan’s titanic work force, which currently is slightly more than 91,000 people worldwide, according to Microsoft’s site. Fudzilla said there will be as many as 15,000 pink slips handed out, but didn’t quote anyone — not even anonymously — providing any verification.

And, if staff had been informed on a companywide basis as the blog suggests, securities laws would typically require Microsoft to publicly disclose that information within 24 hours as a material fact that could affect the company’s stock price.

For that reason, Rob Enderle, an industry analyst with the Enderle Group, doubts that layoffs have been communicated to employees en masse — at least, not yet.

Layoffs “wouldn’t surprise me,” Enderle told InternetNews.com. “But I haven’t heard anything about it.”

Good timing?

To some observers, the week of Jan. 15 might seem like a good time to announce layoffs. The date falls between next week’s Consumer Electronics Show, where CEO Steve Ballmer is expected to announce the beginning of the Windows 7 public beta, and Microsoft’s quarterly earnings call with analysts on Jan. 22.

The worldwide economic slowdown — and its effect on customer spending — has IT vendors scrambling. While some are persevering and sussing out new areas of business, others are bearing the full brunt of the downturn.

“Around the time of the earnings [call] is when you want to make an announcement like that,” Enderle told InternetNews.com. He added that Microsoft would not be smart to reveal worker cuts before the Windows 7 public beta starts, because that would take some of the shine off the pending replacement for Windows Vista.

Two former senior Microsoft development managers, who are still well plugged-in at the firm, said they had not heard anything from inside the company that might point to massive layoffs, but could not rule it out either.

They both suggested, though, that Microsoft is likely to not call whatever it does a “layoff.”

Instead, such an announcement might be couched in euphemisms framing the story as the year-end period when Microsoft managers traditionally evaluate their employees for raises and retention, as well as plan what have become nearly annual company reorganizations.

This article was first published on InternetNews.com. To read the full article, click here.