Microsoft lays off 5,000 as slump hits PC industry

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For the first time in its 34-year history, Microsoft announced that it would cut its workforce by 5,000 after announcing disappointing half year results on 22 January. John Stokdyk reports.

The company's chief financial officer Chris Liddell explained that the 8% drop in operating revenues ($5.94bn) and 11% lower profits ($4.17bn) on the previous quarter came about because economic activity and IT spend slowed beyond our expectations".

Weakness in the PC market and a shift to lower cost netbooks saw an 8% drop in revenues from the company's core client division. Annual licence income grew 15% and strong holiday demand for Xbox 360s helped to soften the blow to its core business, but CEO Steve Ballmer struck a realistic note in the company's results announcement.

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