Bloomberg News

Microsoft Said to Plan Marketing Reorganization, Job Cuts

January 12, 2012

(Updates with marketing spending in seventh paragraph.)

Jan. 11 (Bloomberg) -- Microsoft Corp. is making plans for a companywide restructuring of its marketing operations, a move that may include hundreds of job cuts, according to people familiar with the matter.

The plans haven’t been settled and could change, according to the people, who asked not to be named because the review isn’t public. Job cuts are unlikely to involve thousands of employees, the people said. Initial steps could be announced within the next 30 days, according to one person.

The changes would eliminate overlap in job responsibilities and are designed to help the company better respond to threats from Apple Inc., Google Inc. and Amazon.com Inc., which are increasingly targeting Microsoft’s corporate-computing customers. Microsoft Chief Executive Officer Steve Ballmer doesn’t think the company is getting enough return on the billions it spends annually on marketing, the people said.

The review is being lead by Chris Capossela, who took over as the company’s chief marketing officer last year, according to the people. Capossela is working with senior marketing executives for each of Microsoft’s business groups, such as Yusuf Mehdi from the Xbox unit and Tami Reller from Windows, one of the people said.

Moving People Around

Changes may include shifting some of the more technical marketing workers to engineering groups, cutting employees who don’t have needed skills or whose work is duplicated by other workers, and revamping how marketing groups are organized and where they fit into the rest of the company, the people said.

Peter Wootton, a spokesman for Redmond, Washington-based Microsoft, declined to comment.

Microsoft spent $13.9 billion on sales and marketing in fiscal 2011, which ended on June 30, up 5.5 percent from the previous year. Microsoft said then that it had 25,000 workers devoted to those tasks, without breaking out how many are focused on marketing. The company had about 90,000 full-time employees in total.

Consumer-focused technology companies like Apple are making inroads in the business world, forcing the information- technology industry to regroup. Apple will sell $10 billion worth of iPads and $9 billion of Mac computers to corporate customers this year, a 58 percent jump, Forrester Research Inc. said in a report last week.

Google announced a deal earlier today to supply e-mail and business services to the Spanish bank Banco Bilbao Vizcaya Argentaria SA, marking the biggest corporate contract for the Internet-search company.

Microsoft also is facing rising costs because of a shift to cloud software, which is stored in the company’s data centers and delivered over the Internet. Its $8.5 billion purchase of Skype Technologies SA and Xbox gaming products are increasing expenses as well.

Microsoft announced its first-ever companywide firings in January 2009, a move that included more than 5,000 jobs by the time it concluded.

--Editors: Nick Turner, Jillian Ward

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net;

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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