There are lots of companies with more than 127,104 employees that manage just fine. Boing across the street for instance. The reason for the cuts is two fold. First, Microsoft acquired Nokia and they're going to let go of all of most of the non-engineering staff, as well as a lot of the management. Second, Microsoft just restructured itself. It used to run like a conglomerate with VP essentially running their individual business like a fifedom ala the organizational chart comic (http://www.kaushik.net/avinash/wp-content/uploads/2012/08/or...). Over the last 3 years there's been a series of high profile executives let go with the intent of increasing cooperation between the divisions, then last year the company restructured going from 9(?) divisions down to 4. As a result there's a lot of redundant people and teams. This house cleaning is in part a result of that.