Software giant Microsoft on Thursday has announced its plan to cut workforce amidst slumping sales caused by global economic recession.
As the technology industry is reeling from the impact of the worsening economy, Microsoft said it will lay off 5.5 percent or 5,000 employees for the next 18 months in an attempt to cut costs.
The plan to lay off workers was announced after the software giant released its sales report in the second quarter of its fiscal year.
According to the company report, the net profit slumped 11 percent to more than $4 billion compared to a previous year.
Microsoft also said the software sales slumped by 8 percent to nearly $4 billion dollars in the quarter.
Earlier on December, analysts predicted that Microsoft’s earning will settle in 49 cents, but after a couple of weeks, it fell 2 points short, settling to only 47 cents.
Because of the market volatility, Microsoft officials declined to provide outlook for the remainder of its fiscal year.
After releasing its results for the second quarter of its fiscal year, Microsoft said it was cutting up to 5,000 jobs, or 5.5 percent of its workforce, over the next 18 months.
In a statement, Microsoft CEO Steve Ballmer warned the company that it is not immune to the effects of the ongoing recession, but allayed concerns by saying they are adopting strategy and market approach that will allow the company to survive in this hard time.
Despite Ballmer’s inspirational statement, the company’s shares was down more than 11 percent and settled at $17.11.
The lay off has been estimated to reduced capital expenditures to almost $700 million annually.
The world’s biggest software employs more 90,000 workers.
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