A somber Mr. Ballmer

An internal email written by Microsoft CEO Steve Ballmer, detailing plans to cut 5000 jobs in 18 months as well as other cost cuts, was leaked to the press early this morning.

News that Microsoft may discharge a substantial number of its staff ignited a speculative media earlier this month. Over the past quarter, Microsoft managed to reduce expenses by $600 million.

According to Ballmer, additional cuts will be made "[in] response to the realities of a deteriorating economy," which made its marred Microsoft with Q2 revenue of $16.6 billion — an increase of just 2% compared to 2Q08, and "approximately $900 million below our earlier expectations," Ballmer wrote, gravely detailing a risk-averse path for 2009:

As part of the process of adjustments, we will eliminate up to 5,000 positions in R&D, marketing, sales, finance, LCA, HR, and IT over the next 18 months, of which 1,400 will occur today. We'll also open new positions to support key investment areas during this same period of time. Our net headcount in these functions will decline by 2,000 to 3,000 over the next 18 months. In addition, our workforce in support, consulting, operations, billing, manufacturing, and data center operations will continue to change in direct response to customer needs.

Travel expenses will also be cut 20%, and "significant [spending] reductions" will be made on vendors and contingent staff.

Ballmer concluded by expressing "confidence in the strength of [Microsoft's] competitive position" as well as the soundness of its approach to the new year.

The letter is available in its entirety at Seattle PI.