Wall Street braced for Microsoft disappointment

Microsoft's results are due tonight

Wall Street is bracing itself for lower-than-expected revenue and profit and likely job cuts when Microsoft announces its latest financial results tonight.

PC sales showed their first quarterly decline in six years at the end of 2008, according to analyst IDC, and slowing demand from consumers is predicted to have a knock-on effect on the world's largest software company.

According to Reuters, Wall Street analysts expect Microsoft to report quarterly revenue of $17.1bn, which is below the supplier's own forecast of $17.3bn to $17.8bn.

Rumours of substantial job cuts have been circulating for some time, and would follow on from the more than 35,000 layoffs announced in the past two months by major vendors including EMC, AT&T, Lenovo, Motorola, Dell, Sony and others.

"Checks indicate that Microsoft is likely to engage in headcount reductions to the tune of 6,000 to 8,000 employees or six per cent to eight per cent of its 95,000 workforce," McAdams Wright Ragen analyst Sid Parakh told Reuters.

"Our checks also revealed some speculation over the potential for a second round of cuts in some groups sometime later in the year."

IBM gave a boost to the increasingly beleaguered IT sector today, announcing record annual revenue and profit, but with most of the big vendors due to report results over the next fortnight, analysts are expecting further bad news elsewhere.