The cost-cutting measures start now, with Microsoft today axing 1,400 jobs. Affected or soon-to-be affected divisions include R&D, marketing, sales, finance, legal, HR, and IT. Microsoft expects to save roughly $1.5 billion through the cost-cutting initiative.

The company further noted that it sold 6 million Xbox 360s worldwide between October and December 2008. It has yet to specify what, if any, effect the cuts will have on its Entertainment & Devices division, which is responsible for the Xbox 360 console.

"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."