Questioning Microsoft Layoffs

I am not a big fan of Microsoft.  I jettisoned their MSN service in early 2001 when they lied to users about a week long break in service.  And when my PC hard drive crashed and burned I didn't take much convincing to beat a path to the Apple store for an iMac.  Having said that, I think it is important to focus on the Microsoft layoffs not because I don't particularly like their products, but because I think how the company is handling the economic woes is indicative of our current reality.

The most interesting headline on the layoffs said that "analysts" are not happy with the number.  In other words, Wall Street wanted more people on the street, not less.  This draconian attitude comes a mere three days after the euphoria of President Obama's inauguration and a general belief among Americans that he can and will do something to get our economy back on track.  So, I wonder, are these Lords of Wall Street reading the same news that I am reading?  How can they demand more layoffs when the economy is already reeling?  And the irony is, Microsoft was making money, just not enough money to satisfy Wall Street.

But here is the deal.  Investors have managed to make a lot of money off of Microsoft.  In fact, a little over 4 years ago, Microsoft not only issued a dividend higher than the Wall Street norm, but they also sent out checks to shareholders to the tune of $3 a share!  Bill Gates hauled in (are you sitting down?) $3 BILLION.  Steve Ballmer, the man to emailed Microsoft employees the details about the layoffs, took home $1.2 billion.  Cash.  Wow.

Now, many of the large individual shareholders still live in the Puget Sound area, headquarters to Microsoft.  Paul Allen, owner of the Seattle Seahawk football team, Portland Trailblazers basketball team, and the world's largest yacht (he has several as well as mansions all over the world), still has significant Microsoft holdings in his portfolio.  And last week, Paul Allen's company, Vulcan, also laid off people.  The interesting conflict, then, is that individual shareholders who stand to gain when Microsoft does what Wall Street analysts want, are laying off their neighbors.  

Steve Ballmer, the CEO of Microsoft, contributed over $50,000 to the Obama inauguration celebration, as well as several other top executives of the company.  Think about it, $50,000 could pay someone's salary for a year!  But the $50,000 will gain him important access as he wheels and deals even more tax credits for the company.

And the institutional investors?  Well, guess what?  One of them is JP Morgan Chase, yep, the same bank that is taking bail-out money.  Another large investor is Goldman Sachs.  Same company that former Secretary of the Treasury Henry Paulson came from.

Last, questions are beginning to surface about the status of laid off employees versus those that stay.  Microsoft, like many high-tech companies, hire significant numbers of foreign engineers who are employed under a special immigration status known as H1-B.  It will be interesting to see, if one is produced, an outline of how many H1-B employees were laid off.  

Bottom line, it seems to me, is the Microsoft layoffs open the door for discussions about corporate ethics, morality of employment, how much profit is enough, investor value, shareholder responsibility to the communities they live.  Of course, we know that those kinds of discussions will not happen, but, wait, can't we hope?  In the meantime, another headline today says Starbucks  is about to also announce layoffs.  Wanna' bet Wall Street is asking for those, too?