Microsoft's revenue per employee is about 70% that of Google, and about 38% that of Apple, which means the company needs to be more efficient in deploying its staff and resources. A 10% reduction in headcount ought to be a lower bound, rather than an upper bound, on reductions - unless they can magically move people onto more efficient projects right away.

Bottom line is that Microsoft is a bit bloated.

@edwardm: I don't know whether Microsoft is bloated.

But as long as a company is profitable, it can be a sustainable source of goods/services for its customers and income for its employees. If such a company is forced to raise its profits because its owners are greedy for more, this can easily result in a loss for everyone: Lower quality goods/services for the customers (at the same or higher prices), less income for less employees, and finally, if the customer and/or employee relationship turns sour due to above changes, the company may loose its business completely, becoming a loss for the owners as well.

I don't think that comparing every company to a few temporarily exceptionally profitable ones is a good long-term strategy.

To answer the questions - net income is income after taxes. Other measures include things like days of inventory on hand (and the trend - increasing or decreasing).

Revenue per employee is a simple way to compare efficiency. If 2 companies are the same business areas, and one is producing 2x the revenue per employee there's a clue that one organization is not as efficient as the other. Of course, companies could outsource all their work and have very few employees, creating a high rev/emp value.

Net income, on the other hand, reflects the expenses of production - whether internal or outsourced. Here are the net income/employee figures for Microsoft, Google and Apple: $220,528.75 $239,876.72 $446,228.92

All numbers are calculated from each firm's 2013 SEC Form 10-K filing for their annual finances, which also include their total FTE headcount. Each company reports in different months (e.g. June, Sep, Dec, or something like that) so they do not necessarily align on the same month of the year.

Can a profitable company remain inefficient for the long term? Generally no. When there are multiple competitors, more efficient competitors eventually cut their prices (and/or increase features at the same price). The least efficient firms - and their higher costs - becomes a floor for their own price lowering.

The lowest price a company can charge is determined by their costs (they can go lower and lose money but that is not sustainable). A company with greater efficiency has lower costs and can eventually under price (or deliver more customer value than) the inefficient firm.

Efficiencies can come in different ways. One is a re-organization to put more people on higher valued projects - and to balance resources (and expenses) with the revenue and income from each project. In other words, prioritize towards higher returns on investment.

Some projects with negative or poor return on investment potential, or which no longer fit the firm's strategy, are going to get axed. Can those people get moved on to other projects producing good returns? If possible, sure. But it depends on specific skills and where those can be re-deployed, and if it makes sense to scale up other projects.

This is basic economics/finance/accounting stuff. There's no big mystery to this. Industry analysts and senior executives all look at metrics like these to evaluate how the firms are doing and hopefully identify when they've made mistakes and fix them.

If they don't companies eventually start falling behind - even big ones - and eventually go out of business. Management should have addressed this years ago but didn't and that is part of the reason Steve Ballmer resigned - he said he realized he was the problem and the company needed new leadership.

Layoffs are caused almost always by management having made bad decisions in the past. A frustration for us worker peons is that we seldom see the managers who made the poor decisions losing their jobs.

Updated

Microsoft today announced that it's cutting 18,000 jobs, the biggest round of layoffs in its history, as part of ongoing restructuring efforts. In a release, the company says that Nokia's Devices and Services business, which it acquired for $5 billion last year, will be most affected, with 12,500 "professional and factory positions" expected to go by the end of the year.