(Updated throughout, adding comment from spokesman, more details of layoffs.)
By Jessica Hodgson
Of DOW JONES NEWSWIRES
SAN FRANCISCO -(Dow Jones)- Microsoft Corp. (MSFT) announced 800 layoffs Wednesday, expanding the scale of a cost-reduction program it announced at the beginning of the year.
Redmond, Wash.-based Microsoft said in January that it planned to eliminate 5,000 jobs by 2010 but has now expanded the program by 800 jobs, a spokesman said. The most recent cuts are expected to bring to a close the first major round of layoffs in the company's 34-year history.
"I can confirm we're eliminating 800 jobs today," spokesman Lou Gellos said. "That's part of the larger program we announced in January." The positions being eliminated from Wednesday will affect staff internationally and in a range of business units, he said, without providing further detail.
In total, around 6.3% of the company's approximately 91,000 headcount will have been eliminated after the program is completed, up from the 5.5% previously expected.
Microsoft said at the time the cuts program was announced that it was designed to bring costs in line with a worsening economy and was expected to save Microsoft $1.5 billion a year. Travel expenses have been cut and many contract workers have been eliminated.
Microsoft, the world's largest software maker, announced its first fiscal year of declining sales as a public company this year amid weaker demand for the PCs that drive sales of its flagship Windows software program.
Large work-force reductions were almost unheard of at the company before the beginning of this year, although Microsoft typically makes isolated job cuts and routinely terminates underachieving workers.
Microsoft isn't alone in announcing large-scale job reduction programs, other technology bellwethers like International Business Machines Corp. (IBM), Texas Instruments Inc. (TXN), Sun Microsystems Inc. (JAVA) and Intel Corp. (INTC) have also cut thousands of jobs this year.
But Microsoft has been disproportionately downbeat about the impact of the economy on its business and stressed the need to keep a lid on staff costs going forward.
Chief Executive Steve Ballmer has said he believes the damage done to economies by the recession has been significant, and while signs of improvement are appearing, it will take several years to return to its previous strength.
"What we see today feels like a new normal," Ballmer said at an event in Boston in October.
Microsoft shares were up 2.6% at $28.24 in recent trading Wednesday.
-By Jessica Hodgson, Dow Jones Newswires; 415-439-6455; jessica.hodgson@dowjones.com