Microsoft to cut £1 billion

[Brian Turner]

Software giant Microsoft wants to slash annual costs by $1bn after detecting a sharp rise in spending over the past three years, reports say. The cost cut target was set out by Microsoft chief executive Steve Ballmer in a memo sent to each of the company's 57,000 staff this week.

In it, Mr Ballmer warned Microsoft's expenses had grown faster than revenues for each of the last three years.

"This is obviously not a trend we can continue," he wrote.

The memo was sent to mark the start of Microsoft's new financial year on 1 July.

The planned cuts - which news agencies said would take effect this financial year - would come about "primarily by rethinking how we do things", Mr Ballmer wrote.

Some cuts are likely to come from consolidating Microsoft's event planning and customer relations activities.

But employees have already felt the pinch, with free towels disappearing from shower rooms and payments required from staff for some branded drugs prescribed on the firm's health plan.

In his memo, Mr Ballmer warned that Microsoft must avoid the classic mistakes of global corporate giants if it is to stay ahead of its competitors and reinvigorate its share price.

He argued that the best way of doing so was to remain sensitive to the needs of customers and shareholders.

"Nothing solves 'big company' ills quite like a strong focus on accountability for results with customers and shareholders," he wrote.

Microsoft has a $56bn cash pile, but some investors are concerned that its dominance of desktop computer software may mean it faces a mature market.

Its reputation has also been damaged by a proliferation of viruses which exploit vulnerabilities in the firm's software, run on most of the world's computers.


http://news.bbc.co.uk/1/hi/business/3872717.stm

[Brian Turner]

In other Microsoft news:


Microsoft has been given preliminary approval to settle a class-action anti-trust case in Arizona by giving away $105m (£57m) in computer vouchers. The software giant had been accused of using its monopoly position to over charge for its software.

Under the deal businesses and homes who bought Microsoft products between January 1996 and January 2002 will get vouchers of up to $24 each.

These will be valid for the products of any computer firm, not just Microsoft.

Under the settlement, which has been given preliminary approval by an Arizona judge, the state's public schools will get 50% of any unclaimed or unredeemed vouchers.

Final approval of the deal is set for December.

No stranger to facing legal action, last year Microsoft settled a California class-action suit for $1.1bn in vouchers.

And it is currently appealing against a 497m euros ($606m; £331m) fine from the European Union, which ruled that Microsoft abused its dominant market position.

Source: http://news.bbc.co.uk/1/hi/business/3848531.stm