Microsoft employees love their perks, as evidenced by their outrage a few years ago over a short-lived decision to end laundered towel service for people who commute by bike or play sports on the company’s Redmond campus.
But the company’s latest financial report suggests that its managers and employees are adjusting to new economic realities along with everyone else. In fact, they appear to be tightening their belts even more than executives expected.
Microsoft said last week that its operating expenses for the current fiscal year, ending June 30, would be about $26.7 billion to $26.9 billion. That’s at least $500 million below the operating expenses Microsoft was expecting three months earlier.
Chris Liddell, the company’s chief financial officer, gave at least part of the credit to a newfound sense of frugality among Microsoft employees. Citing areas including air travel and hiring, Liddell told Wall Street analysts that employees have been doing “even more than what we have asked them” to save money.
The previous projections assumed that employees would have implemented Microsoft’s new spending rules exactly as they were intended, Liddell explained. The lower numbers reflect the fact that they have been going beyond the rules, cutting costs “in an even more extreme fashion,” Liddell said.
Microsoft has, so far, kept many perks – including its Connector regional bus service and free soda in campus refrigerators. But in other areas, it has pared back.
Most notably, Microsoft laid off 1,400 workers in January and said it may cut up to 3,600 more jobs by June 2010. (The impact of those cuts is cushioned somewhat by the company’s continued hiring in other areas.) Microsoft also cut its billing rates for contract workers employed at the company through outside agencies.
The moves reflect the difficult economy and decreased demand for the company’s products. The company last week reported its first year-over-year decline in quarterly revenue – a 6 percent drop compared to the same period a year ago.
A day after releasing those results, Microsoft last week said it was canceling the company’s annual picnic, in another cost-cutting move.
In years past, such a decision might have prompted some anonymous indignation from employees on blogs and online forums. But in this economic climate, the response was almost positive. The picnic was a “good thing to cut if you ask me,” wrote one anonymous Microsoft employee in the comments section of the popular Mini-Microsoft blog.
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