Microsoft tightens its belt further

Microsoft is making further cut backs

Microsoft has revealed further cost-cutting measures to help it weather the economic storm, including reducing the use of vendors, slashing marketing spend and postponing plans for a new datacentre.

The company announced last week that it will cut 5,000 jobs, and has now confirmed that it will delay plans to build a new datacentre in Des Moines, Iowa earmarked to host services including Hotmail, Live Search and Windows Live applications.

Microsoft will continue construction of two datacentres in Chicago and Dublin, however, reflecting the level of demand for the firm's online services, according to a company blog post.

Arne Josefsberg, general manager of infrastructure services, and Michael Manos, general manager of datacenters, said in the posting that the firm would revisit its datacentre plans on a quarterly basis.

The blog also emphasised that Microsoft's online services business is still seeing some growth, driven by the fact that firms are increasingly relying on them in efforts to cut back on costs.

Microsoft's online services brought in $866m (£621m) in revenues for the fourth quarter of 2008, up from $863m (£619m) in the same period in 2007.

Microsoft shares hit an 11-year low of $17.11 on Thursday, falling 12 per cent after disappointing financial results and the proposed lay-off of some 5,000 employees.

Google admitted last month that it had been forced to freeze expansion plans for a planned datacentre in Oklahoma.