NEW YORK: US software giant Microsoft announced the most sweeping job cuts in its history on Thursday as a worsening economy and weak spending on technology sent quarterly profit sharply lower.

Releasing its results for the second quarter of its fiscal year, Microsoft said it was cutting up to 5,000 jobs, or 5.5 per cent of its workforce, over the next 18 months.

The Redmond, Washington-based company said net profit fell by 11 per cent in the quarter from a year ago to 4.17 billion dollars on a revenue of 16.63 billion dollars, a two percent rise from a year ago.
It said earnings per share were 47 cents for the quarter that ended on December 31, less than the 49 cents per share forecast by analysts.
'While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach,' Microsoft chief executive Steve Ballmer said in a statement.
'We will continue to manage expenses and invest in long-term opportunities to deliver value to customers and shareholders, and we will emerge an even stronger industry leader than we are today.'
Ballmer's reassuring words failed to prevent Microsoft's shares from plunging on Wall Street, where they lost 11.71 per cent to close at 17.11 dollars.
'In light of the further deterioration of global economic conditions,' Microsoft said it was eliminating 'up to 5,000 jobs in R&D (research and development), marketing, sales, finance, legal, HR (human resources), and IT (information technology) over the next 18 months, including 1,400 jobs today.'
Microsoft employs some 91,000 people and rumors of job cuts at the world's biggest software firm had been circulating for weeks.
The company said the move was among various steps designed to manage costs, 'including the reduction of headcount-related expenses, vendors and contingent staff, facilities, capital expenditures and marketing.'
'These initiatives will reduce the company's annual operating expense run rate by approximately 1.5 billion dollars and reduce fiscal year 2009 capital expenditures by 700 million dollars,' Microsoft said.