In a reflection of the poor sales of Windows as the PC market shrank amid the global recession, Microsoft’s net income was down 11 percent in the fourth quarter, and the company will eliminate up to 5,000 jobs. The latter announcement came in a 10-Q filing. We noted yesterday that McAdams Wright Ragen analyst Sid Parakh, like many other analysts, expected the Redmond company would announce cuts of 6,000 to 8,000 employees, or 6 percent to 8 percent of its 95,000 workforce.

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About 1,400 jobs will be cut immediately. Further reductions will be made by June 2010. Microsoft (NSDQ: MSFT) expects to save roughly $1.5 billion in operating expenses and $700 million in 2009 capital expenditures. AllThingsD’s Kara Swisher has the memo CEO Steve Ballmer sent out to staffers announcing the cuts here.

—Earnings: Net income came in $4.17 billion, down 11 percent year-over-year, with EPS of $0.47, missing analysts’ estimates of 49 cents, according to a consensus compiled by Briefing.com, which was cited by CNN Money.

—Revenues: Despite the deteriorating economy mentioned in its report, Microsoft’s revenues were something of a bright spot. Revs came in $16.63 billion in Q4, a 2 percent gain over last year’s $16.37.

—Online services revenues, however, barely moved, rising to $866 million from Q407’s $863 million. The unit also reported losses widened in Q4, to $471 million from $247 million.

—Entertainment and Devices Division revenue was up a slight 3.3 percent. Operating income was essentially flat.

Earnings release | Transcript (via Seeking Alpha)

Photo Credit: Robert Scoble