Wall Street and the tech industry acted with shock and awe as Microsoft announced plans to lay off as many as 5,000 employees over 18 months and trim operating expenses. Too bad neither development is actually happening. According to a report in the Wall Street Journal today, Microsoft’s "cuts" are hardly deep and, if you look closely, you’ll see that the software giant isn’t really doing much at all to address the very real problems it faces. First, the layoffs: Although Microsoft has said it will lay off "up to" 5,000 employees over 18 months, the company also revealed that it plans to add "a couple thousand" new Internet search employees this year, dropping the actual number of employees lost by about half. But let’s say Microsoft is laying off 5,000 people: That number represents just 5 percent of its workforce and drops the number of employees the company has to June 2008 levels. And the company is still hiring: Its general and administrative head count grew 6 percent in the previous quarter, while sales and marketing grew 4 percent. And then there’s the operating expenses: Microsoft said that its layoffs would save $1.5 billion in operating expenses. But its budget for the current fiscal year is 10 percent higher than that of the previous year, almost completely wiping out those savings. The conclusion? "It may be that Microsoft simply doesn’t know how to control costs," the Wall Street Journal opines. And apparently the software giant agrees. "We’re not used to down markets," Microsoft CEO Steve Ballmer said Thursday. Yikes.
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