Saturday, January 24, 2009

Winter in Silicon Valley

The first two weeks of 2009 saw some marvelous weather in Silicon Valley with clear blue skies most days and mild temperatures over night. I had started to think that we'd just skip the rest of Winter and roll straight on into Spring. However, the gloom returned this week in the form of rain, overcast skies and the news that my employer has eliminated 1400 jobs. The last part didn't really come as a shock since rumors have circled the blogosphere that Microsoft would announce job cuts on the back of poor final quarter results for 2008. As you can imagine, the company's stock price dropped a little following the announcement. 

I work for the Server and Tools business, which is led my Bob Muglia, and we actually had a positive quarter. Our business has a lot of annuity income from contracts that were signed during the boom, so we managed to keep our head above water. However, executive management has realized that the economy is likely to stay down for a few years and that steps must be taken to realign expenses and focus on growth areas of the business.

The decision to cut 1400 jobs this week seems to be a move to free headcount so that people can be hired into growth areas without pushing up wages. Microsoft also intends to cut a further 3600 jobs in the next 18 months. That said, you can expect to see strong hiring in the Live Search business as Microsoft endeavors to take market share in search advertising away from Google. Microsoft is still open to a search deal with Yahoo! and perhaps we'll hear more about this now that Yahoo! has appointed a new Chief Executive. I guess we should thank Jerry Yang for squelching the merger.

My job appears to be safe. We're working on a version 1 product that will deliver new features in Win8 and help to differentiate Windows Server from the competition. Microsoft is geared for long term success and I think that the historically low stock price makes it a good long term buy right now. Otherwise, I'm focusing on shipping a great product for Windows Server, and to that end, I better get back to work.

Happy Australia Day weekend everyone!

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