Shares of Microsoft (MSFT) fell to a new 52 week low after an unexpected earnings miss. Let's take a look at the headline news followed by a discussion.



Reuters is reporting Microsoft stuns with profit miss, to cut up to 5,000 jobs



Microsoft Corp stunned Wall Street with disappointing results that included plans to slash up to 5,000 jobs and a warning that profit and revenue will almost certainly drop over the next two quarters.



Microsoft's shares dropped 9 percent, adding to a 40 percent decline in the past year. It blamed the miss on the weakness of the PC market and the popularity of low-cost netbook computers, which have combined to badly undercut sales of its dominant Windows operating system.



The market has become so volatile, Microsoft cautioned, that it has decided against issuing earnings or revenue forecasts for the rest of its fiscal year ending June 30, 2009 -- other than to predict both will very likely be lower.



"The fact that they are withdrawing guidance is really bad. It adds to uncertainty. It is pretty bad when things are deteriorating so fast that even the largest companies in the world don't know how rapidly it is happening," said Jefferies analyst Katherine Egbert.



Microsoft posted a profit of $4.17 billion, or 47 cents per share, in its fiscal second quarter ended December 31, versus a profit of $4.71 billion, or 50 cents, a year earlier. Analysts were looking for earnings per share of 49 cents, according to Reuters Estimates.



Microsoft said it will eliminate up to 5,000 jobs in research and development, marketing, sales, finance, legal, human resources and information technology over the next 18 months, including 1,400 jobs on Thursday. That amounts to about 5 percent of its estimated 96,000 work force, the biggest ever cuts by the software maker.

Microsoft, An Aging Gorilla