Image via CrunchBaseKIRO TV 7, the Wall Street Journal, and many others are back in the news today talking about the potential for Microsoft layoffs again. While the initial rumor showed up on Mini-Microsoft, for the most part the group there debunked the rumor, however, the news is slowly trending back into the idea that while Microsoft has a healthy cash balance right now, if the recession moves into 2010 this will require that Microsoft take some action of some sort.

The Wall Street Journal is reporting that Microsoft is only exploring the idea of job cuts right now. The exploration of job cuts and the movement to an actual job cut as a way to preserve cash is not new, we saw a similar layoff cycle amongst startups here in Seattle in October 2008, with IBM, Boeing, and others also starting the layoff cycle in January 2009. Companies are cutting back all over the Puget Sound region; it would be imprudent to think that Microsoft is not looking at the same idea. Even if there are no direct facts to support the rumor coming from Microsoft this week.

Large work force reductions have been nearly unheard of throughout Microsoft’s more than three decades in business. At times, the company has made isolated job cuts, sometimes following acquisitions of other companies, and it routinely terminates underachieving workers. Overall though, the company’s headcount has steadily risen to more than 91,000 employees in the fiscal year ended last June from over 31,000 in June 1999. Microsoft’s headcount growth between its 2007 and 2008 fiscal years was particularly sharp, rising by more than 12,000 people, or 15%, in one year. Source: WSJ

The belief is that if Microsoft announces layoffs it will come when it reports its financials next Thursday. Odds are highly likely that any layoffs will come from contractor staff initially, as Microsoft did in 2000/2001, only hitting blue badges if they are under performing or on Personal Improvement Plans (PIP’s).

While this is still all rumors, the idea of this hitting mainstream news is going to raise the fear level in Seattle. We all might be breathing a collective sigh of relief if no layoffs come next week, but with the level of uncertainty right now, many people affiliated or directly working for Microsoft are making plans on cutting back on their own staff, or on their own growth/hiring plans. Even if no layoffs happen, contractor companies, and local stores are all going to be cutting back, as a safety just in case something happens measure.

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