Microsoft CEO Steve Ballmer is planning to cut costs by $1 billion a year, because the company’s expenses have grown faster than its revenues for three years running. Or so claimed a report in The Wall Street Journal online edition on Tuesday.
The report says Ballmer sent out a memo to the company’s employees on Tuesday laying out a billion dollars in cost cutting and promising increased innovation to boost the company’s sales and stock price.
In an interview with the paper, Ballmer for the first time confirmed the company would cut $1 billion in expenses in the current fiscal year, and said the cost cuts were necessary. He also urged employees to take more accountability for their work, setting more realistic goals and meeting them, the paper reported.
The cuts will come from employee benefit changes and primarily from savings in unifying its marketing and advertising across business units, and consolidating the number of outside partners it uses for event planning, direct mailing and other customer relations activities, the Journal reported, citing a Microsoft spokesman.
Microsoft’s costs per employee will still rise by 6 percent in the current fiscal year due to significant increases in health-care expenses, Ballmer noted in the memo, according to the Journal report.