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REDMOND, WA-Microsoft Corp. said Thursday it will cut loose 5,000 of its 94,000 workers, making the first large-scale layoffs in the publicly traded software giant’s history. The company announced the cuts Thursday along with an 11% drop in second-quarter profit, which was below many analysts’ estimates. The jobs will be shed over the next 18 months in R&D, marketing, sales, finance, legal, HR, and IT. Approximately 1,400 employees will be let go immediately.

“Consumers and businesses have reined in spending, which is affecting PC shipments and IT expenditures,” states Microsoft CEO Steve Ballmer in a Thursday memo to employees. “Our response to this environment must combine a commitment to long-term investments in innovation with prompt action to reduce our costs.”

The cuts follow similar moves by other big names in technology, including Intel and Google. On a conference call with analysts, Ballmer described the current environment as “a once-in-a-lifetime set of economic conditions” that has businesses and consumers spending less and stretching the life span of their existing computers.

Earlier this month, with new buildings under construction on its main campus here, and hard commitments for multiple high-rise buildings still under construction in Bellevue, Microsoft Corp. confirmed for GlobeSt.com that it has rescinded a long-standing LOI for 2201 Westlake, a 300,000-square-foot development in Downtown Seattle by Vulcan Inc., the real estate arm of billionaire Paul Allen, who founded Microsoft in 1975 with current chairman Bill Gates.

“When our discussions began, the economy wasn’t like this,” Microsoft Spokesman Lou Gellos tells GlobeSt.com, explaining that while it decided not to lease 2201 Westlake it’s still in growth mode. “We are still in the process of constructing several new buildings at our Redmond campus, two of which were recently completed and are now being occupied, and have leased three high-rise buildings in Bellevue that are still under construction” or are just now being occupied.

In April 2007, Microsoft Corp. inked long-term leases for the entirety of two under-construction office developments in Bellevue totaling 1.3 million square feet. Headquartered in the neighboring Redmond, the public software company leased the 740,000-square-foot Bravern Office Commons next to Meydenbauer Center in Downtown Bellevue and the 600,000-square-foot Advanta Office Commons adjacent to Interstate 90 in southeast Bellevue.

Microsoft was one of several technology and web companies that have tied up additional space in the region over the past two years. In December 2007, Amazon inked a deal for a new headquarters campus in Seattle’s Westlake/Terry district. The agreement had it occupying at least 820,000 square feet in the development and as much as 1.6 million square feet from 2010 to 2012. Since that time, the company has upped its base lease commitment to 1.26 million square feet and secured options to lease an additional 830,000 square feet in the development, taking its total potential leasehold at the project to approximately 2.2 million square feet.

In the fall of 2007, Yahoo entered the Seattle market with its long-term 115,000-square-foot lease at One [email protected] in Bellevue, WA, and Google expanded its presence by preleasing Lakeview Plaza–a 195,000-square-foot, three building campus here–that was under construction near its existing facilities. During the summer of 2007, Expedia Inc. signed a 10-year lease for 84% of Tower 333, a 414,000-square-foot, 20-story office building that was under construction in Downtown Bellevue.

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