Microsoft layoffs add to Puget Sound challenges, opportunities

THE significance of Thursday's layoff at Microsoft is not in the immediate number. It is in the ending of a trend.

For years, Microsoft has grown like some fantastic tree. From 1986 to the end of the dot-com boom in 2000, its revenues, profits, head count and stock price went up, up, up. The stock price was the first to top out, almost a decade ago. Revenue, profit and head count kept going up, employment increasing in recent years at a 12 percent annual rate. The Puget Sound economy — retail sales, real estate, investments — came to rely on that. Now it subsides.

The layoff Thursday included 876 people here. That's just 2 percent of Microsoft's Puget Sound total. The further layoff over the next year and a half might be another 5 to 6 percent of employees here. Add to that a cut in contract work of up to 15 percent, but subtract from the cut the company's intention to hire several thousand new people to work in Internet search.

Compared with other companies' layoffs — including those last year at The Seattle Times — Microsoft's cuts are moderate. An anonymous blogger at the unauthorized Mini-Microsoft blog argued last week that "we've doubled our ranks far too fast" and that the company really needs a thin-out.

Maybe it does, yet the timing is terrible. Microsoft is jettisoning people at the same time employees are being shed by Boeing, Washington Mutual, the Seattle Post-Intelligencer and others. Some of these layoffs really should have been made earlier, but were delayed because they could be. Now they come at once and collapse the labor market.

This is a time of pain, some of which might have been avoided, but also a time of opportunity. There are people at Microsoft and elsewhere with commercial ideas. They have thought about going on their own, when they were ready. An opportunity now opens. If you want your pick of a staff, a cheap price on office space — it is available, or soon will be. Capital is scared — meaning it will not be bidding against you.

Microsoft should remain a big red cedar of the Puget Sound economy, a tower of strength. It may return to growth, but not at the rate of the past 25 years. Other enterprises need sprouting.