The layoffs, 1,400 of which come immediately, appear to be a first for Microsoft, which was founded in 1975, aside from relatively limited staff cuts the software company made after acquiring companies.

The company announced the cuts as it reported an 11 percent drop in second-quarter profit, which fell short of Wall Street's expectations. The company also said it is unable to offer profit and revenue guidance for the rest of the year, because of the market volatility.

IBM's chief financial officer Mark Loughridge said the west European market was performing poorly so jobs would be lost in the UK, Germany, France and Italy.

He gave no figures on how many jobs would be lost in each country.

Answering questions after a conference call with analysts, he said the job cuts were new, and not "bundled" together parts of an ongoing restructuring.