A bad sign: Microsoft says it is cutting 5,000 jobs over the next 18 months—more than 5% of its work force—a sign of how badly even the biggest and richest companies are being stung by the recession. The layoffs appear to be a first for Microsoft, which was founded in 1975, aside from relatively limited staff cuts the software company made after acquiring companies. The company announced the cuts as it reported an 11% drop in second-quarter profit, which fell short of Wall Street’s expectations. Microsoft shares plunged almost 11% in midday trading. The biggest names in the technology sector have been no stranger to layoffs lately. Giants such as chipmaker Intel and even Google are among the companies that have pulled back on jobs to hunker down in the recession.
Money man: The Senate Finance Committee today cleared the nomination of Timothy Geithner as treasury secretary despite unhappiness over his mistakes in paying his taxes. The committee approved the nomination on an 18-5 vote, sending it to the full Senate for a vote either Friday or next week. President Barack Obama is hoping for quick approval so that the point man for the administration’s economic rescue effort can begin work. The committee vote came a day after Geithner appeared before the panel to apologize for what he called “careless mistakes” in failing to pay $34,000 in taxes earlier in the decade, when he worked at the International Monetary Fund. The nomination was expected to win approval by the full Senate, with many lawmakers saying that given the serious economic crisis facing the country, the new president deserved to have the services of a man of Geithner’s abilities and experience.
Former Merrill Lynch exec leaves job: Former Merrill Lynch & Co. CEO John Thain resigned from Bank of America Corp. today following news that Merrill had moved up its year-end bonuses, paying them just before BofA completed its acquisition of Merrill and sought more government bailout money. The company gave no reason for Thain’s departure. Bank of America spokesman Scott Silvestri issued a terse statement: “(BofA Chairman and CEO) Ken Lewis flew to New York today to talk to John Thain. And it was mutually agreed that his situation was not working out and he would resign.” The bonuses to Merrill Lynch executives were also paid out as the company prepared to report a $15.45 billion fourth-quarter loss—a loss that led Bank of America to request and receive $20 billion in government bailout money. Merrill also received bailout funds.