On the heel of the announcement that Microsoft will be cutting 5,000 job, shares took a sharp fall. The software giant announced several measures to save costs in addition to cutting jobs. One of the announcements was a plan to postpone building a new data center.

Microsoft shares hit a 11-year low after the company announced a huge drop in profits. The company also announced its biggest job cut ever and also indicated that profit drops will persist over the next two quarters. The company shares dropped 12 percent to $17.11 upon Microsoft’s announcement.

It certainly is concerning when companies that have historically proven to be stable are experiencing financial woes. Microsoft’s portfolio consists of the iron clad Windows and Office products that have propelled the company to what it is today.

Microsoft has also announced that the company will postpone plans to build a new data center in Iowa. The new data center would have created more new jobs in that area, but is currently on hiatus due to the state of the company. Considering that the company has announced plans for massive job cuts, it makes sense that a hiring freeze would be put in place.

Microsoft is not the only company to hold off on development, as Google recently postponed plans to build a facility in Oklahoma as well. With all of the big layoffs and postponement of construction from many of the big tech companies, it seems like the unemployment rate may skyrocket if things continue the way they currently are.

With banks failing in the US and tech companies scaling back, the economy may enter a vicious cycle that might be extremely difficult to escape from. Its looking like 2009 will be a bleak year for the tech world.

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Entry was posted on Monday, January 26th, 2009 at 1:47 am under Microsoft, Technology.

Read more entries by Mike Ferro.
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