The pink slips are flying once again in Redmond. Seattle's TechFlash is reporting that Microsoft (Nasdaq: MSFT) is laying off hundreds of employees this week.
Dismissing hires is never easy, but it's just part of the evolutionary process as the software giant itself begins to diminish in relevance.
Microsoft may have stunned the market when it announced that it would be eliminating more than 5,000 posts in January of last year -- its first-ever massive round of layoffs -- but we were also neck deep in a global recession at the time.
Everybody was doing it, paving the way for healthier margins this year as a result of prudent cost controls.
Why now, Microsoft?
Outplacement firm Challenger Gray & Christmas announced that planned layoffs during the first half of the year fell to their lowest level in a decade. There's just something fishy about these pink slips, even if hundreds of jobs may not seem like much for a company with nearly 90,000 global employees.
Wells Fargo also announced that it would cut 3,800 jobs last night, but mostly as the banking giant closes down a subprime lending unit. Microsoft is toiling away in a technology field that should be booming at the first whiffs of Corporate America's recovery.
Only a few years ago, Microsoft personnel moves would send ripples through the tech world. These days, it's just a matter of Microsoft fitting into smaller clothing to fit its shrinking skin.
Everywhere you turn, Microsoft is losing ground. The Kin falling flat is just its latest failure, but it's a telling indicator of Microsoft's inability to compete in the smartphone space with Apple (Nasdaq: AAPL), Research In Motion (Nasdaq: RIMM), and Google's (Nasdaq: GOOG) Android. The highly anticipated upgrade to its mobile operating system is unlikely to gobble up market share.
Back out Windows-related revenue from Microsoft's latest quarter and revenue actually fell in its latest quarter. Yes, Windows 7 is an initial hit, but the upcoming wave of tablets powered by Android and Hewlett-Packard's (NYSE: HPQ) webOS is likely to nibble away at Mr. Softy's operating system mastery.
Analysts may disagree with my theory. They believe that revenue grew 6% at Microsoft in the fiscal year that ended last week. Wall Street feels that top-line growth will accelerate by 9% in the new fiscal year.
I'm not sure I see it that way. Microsoft may be making advances online through Bing, but its bread-and-butter Office and Windows flagship product lines seem far more likely to matter less in the future than matter more.
Either way, there's no way to spin layoffs as a positive, even if we're only talking about less than 1% of its workforce.
Do you think that Microsoft will be more or less important in three years? Share your thoughts in the comments box below.
