The company’s Kiwi ex-pat CFO Chris Liddell announced the software giant’s first ever round of lay-offs today as it braces for lower revenue and profit. Microsoft New Zealand is spared, with no local lay-offs amid the global purge.

The cuts will take place over the next 18 months, and if the 5000 figure is reached will represent close to 5% of Microsoft’s 91,000-strong global workforce. 1400 cuts will be immediate.

Although the company reported a 1.6% revenue rise to $US16 billion for its December quarter, its $US4.17 billion profit was down from $US0.50 a share in the year-ago quarter to $US0.47.

There was noticeable weakness in the client division, whose earnings fell 13% on weakness in the personal computer market that hit sales of Windows – especially in the consumer segment, where the recession has coincided with the rise of sub-$1000 netbooks like Dell's $799 Inspiron Mini 9, now one of the fastest growing segments in New Zealand, and worldwide, says IDC. Netbooks are often sold with cheaper versions of Windows, or eschew Windows altogether in favour of Linux.

Mr Liddell says the weak PC market will now "almost certainly leading to lower revenue and earnings for the second half."

Combined with a salary freeze and other cutbacks, Mr Liddell expects to save $1.5 billion a year through the global redundancies.

Microsoft shares dived on Mr Liddell’s profit warning, and were down 9.75% at midday on the Nasdaq.

A spokesman for Microsoft said there would be no local lay-offs in the inital wave of 1400 staff cuts.

However, Microsoft NZ corportate communications director is cautious, tellig NBR: "Microsoft in New Zealand is not directly impacted by the job eliminations. [But] we expect that the global economic environment will continue to be challenging and we will continue to evaluate our business".