Microsoft today announced that due to "the further deterioration of global economic conditions," it will "eliminate up to 5,000 jobs" over the next 18 months.
1,400 jobs will be cut immediately with R&D, marketing, sales, finance, legal, HR and IT all affected.
Microsoft intends to recoup approximately $1.5 billion through the cost-cutting initiative.
"While we are not immune to the effects of the economy, I am confident in the strength of our product portfolio and soundness of our approach," said Microsoft CEO Steve Ballmer.
"We will continue to manage expenses and invest in long-term opportunities... we will emerge an even stronger industry leader than we are today."
Microsoft said that 6 million Xbox 360s were sold worldwide between October and December 2008.
The company has yet to specify whether its Entertainment & Devices division will be affected.
By Mike Bowden