Microsoft is to cut up to 5,000 jobs over the next 18 months, including 1400 immediately.
The company has reported a net profit of $US4.17 billion for the three months to 31 December - down 11% on last year.
Microsoft said it was "no longer able" to give a profit and revenue outlook for the fiscal year amid current volatile market conditions.
Microsoft said the job cuts would be in research and development, marketing, sales, finance, legal, human resources and information technology.
It would also reduce other spending by $US1.5 billion, including a reduction in spending on travel, and reduce capital expenditure by $US700 million.
Japanese electronics giant Sony also says it has been badly hit by the economic slump and expects to slip into the red.
