The tech industry is beginning to feel the heat from a financial meltdown that has been burning the rest of the world for months. Microsoft recently announced that it would lay off up to 5,000 employees -- 5 percent of its work force -- over the next 18 months, starting with 1,400 jobs immediately.

Chipmaker Intel is also reportedly laying off between 5,000 and 6,000 jobs while closing five plants in the U.S. and Asia in response to falling computer sales. (Source: bbc.co.uk)

The announcement came a week after reporting a 90% dip in profits for the last three months of 2008. Facilities to be closed by Intel include its factory in Santa Clara and sister sites in Oregon, Malaysia and the Philippines. Intel said closing the five plants would not affect continuing investment in its more modern manufacturing facilities. The two U.S. factories being closed were based on older microchip technology.

Microsoft posted quarterly results far short of analysts' and its own expectations. In turn, the company is eliminating jobs in research and development, marketing, sales, finance, legal, human resources and IT. According to a spokesperson, generous severance and outplacement services are being offered. (Source: nwsource.com)

In addition to the layoffs, Microsoft will slash travel budgets and marketing expenses, postpone almost all new construction on its campus and reduce the number of vendors and contingent staff. The changes are expected to cut Microsoft's annual operating expenses by $1.5 billion per year.

Microsoft added a record 12,694 workers during its 2008 fiscal year and had almost 96,000 employees as of late November.

'Netbooks' that attribute to lower profit margins and use slower chips added to the problem of shrinking computer sales.

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