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Microsoft had grim news for investors and industry observers this morning, announcing its first large-scale layoffs while reporting that it missed earnings estimates during its second fiscal quarter of 2009.

While the world's largest software company continues to be profitable, its income has been scaled down since it last prognosticated about sales and earnings during its annual meeting in November.

To compensate, Microsoft said that it plans to cut around 5,000 jobs over the next year and a half, beginning with 1,400 layoffs slated to take place immediately. The reductions are about a third of what had long been rumored. Gossip had been swirling since late last year that the software titan would lay off as many as 15,000 -- perhaps as much as 17 percent of its workforce.

During a conference call with financial analysts, Microsoft CFO Chris Liddell also said that the company has also imposed a salary freeze.

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