Microsoft plans to hire 5,000

The world's largest software company plans to grow even larger in the coming year by adding up to 5,000 employees, as many as half of them in the Puget Sound region.

Microsoft Corp. will employ almost 60,000 people worldwide a year from now if its hiring hits the upper end of the projected range it made public yesterday. That's more than the population of Magnolia, Queen Anne and Belltown combined.

The Redmond company also expects to boost its spending on research and development to as much as $6.9 billion this fiscal year, $500 million more than it spent last year.

The technological advancements the company is pursuing "require very substantial investments, things that could not be done by a software company with only hundreds of developers," Microsoft Chairman Bill Gates said yesterday. He added later, "Obviously, we've put our money where our beliefs are."

Microsoft said it plans to add between 4,000 and 5,000 positions during the current fiscal year, which began July 1. The majority will be added in the United States. Between 2,000 and 2,500 of those will be in the Puget Sound region, a spokesman said. The company declined to break down the hiring plan by job type or division.

Such expansion is nothing new for Microsoft, which currently employs more than 26,700 people in the Puget Sound region. Worldwide, the company added more than 3,800 employees during the past year and more than 40,000 employees during the past decade.

That growth has helped buffer the Seattle region from the deeper effects of declining aerospace employment, primarily at The Boeing Co. In recent years, Microsoft's expansion has also counteracted, to a degree, widespread layoffs by other technology companies.

Microsoft "is rather remarkable in that regard," said Dick Conway, a Seattle economist who has conducted studies for the company. Overall, the 1990s "would have been a rather miserable decade" for the region's employment were it not for the software giant's growth, Conway said.

A recent decision made by the company could help it find quality workers for the new positions. Executives believe Microsoft's shift to giving employees actual stock grants, rather than stock options, will help attract and retain employees.

Even so, finding the right ones won't be easy, said Michael Cherry, lead analyst for operating systems at Directions on Microsoft, an independent research and analysis firm. "They face a real challenge there, because the kinds of people they need to hire have a really specific skill set," Cherry said.

Microsoft has made selective layoffs, primarily as a result of shifting strategy. Most recently, the company eliminated 19 sales jobs in its educational solutions group in Redmond after deciding to shift the positions to field offices elsewhere in the country, said spokeswoman Stacy Drake. As in other instances, Microsoft will help the affected employees find other jobs with the company.

The company disclosed its hiring and spending plans as it met with more than 300 analysts, institutional investors and reporters yesterday on its Redmond campus. Microsoft's top executives and the heads of its business groups -- ranging from Windows to MSN to mobile devices -- used the annual event to detail their progress during the past year and their plans for the next.

During his presentation yesterday, Gates described the company's plans for the next generation of Windows, code-named Longhorn, which promises major improvements in the way computer users interact with the operating system. Despite reports that Microsoft is aiming for a 2005 release date, Gates said the company doesn't yet know the exact timeframe.

"Clearly, it's many years of work that we're engaging in," he said, characterizing the product as critical to Microsoft's future.

Whenever it happens, the release of Longhorn will coincide with advances in other products, including Microsoft Office and software for computer servers, Gates said.

"Virtually everything at Microsoft is synchronized to build on that platform and take advantage of that," he said.

At its Professional Developers Conference in late October, Microsoft will give CDs to software developers that show Longhorn's expected capabilities in further detail, said Jim Allchin, group vice president of Microsoft's platform group. The first beta, or preliminary, version of the new operating system will be released next year, Allchin said during his presentation to the analysts.

Longhorn will be the next step in an area where Microsoft has already seen great success. The desktop Windows division is one of three profitable Microsoft business groups.

Four others, including MSN and mobile devices, have yet to reach profitability. The company yesterday introduced a slate of new financial executives, including a chief financial officer for each of the seven divisions, who could help in that regard.

One of Microsoft's unprofitable divisions, its business solutions group, plans to reach profitability in 2005, said Doug Burgum, senior vice president in charge of the group.

"I believe that's a very achievable goal for us, based on the trajectory that we're on today," Burgum said.

That profitability will come in spite of the fact that the division is spending more on research and development than its competitors. The business solutions group posted a loss of $228 million in the first nine months of Microsoft's fiscal 2003.

Investors would no doubt like it if Microsoft's unprofitable divisions reached profitability. But another financial topic discussed yesterday isn't yet warming their hearts. The company reiterated that it doesn't plan, for the time being, to give some of its $49 billion in cash back to shareholders in the form of a larger dividend.

Chief Financial Officer John Connors asked shareholders to be patient, reminding them of the refrain in a country-western song made famous by Willie Nelson: "If you've got the money, honey, I've got the time."

P-I reporter Todd Bishop can be reached at 206-448-8221 or toddbishop@seattlepi.com

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