Highlights:

* Says client revenue declined 8% as a result of pc market weakness and a

continued shift to lower priced netbooks

* Says economic activity and it spend slowed beyond our expectations in the

quarter

* Says entertainment and devices revenue grew 3% driven by strong holiday

demand for xbox 360 consoles

* Says reduction of headcount-related expenses

* Says no longer able to offer quantitative revenue and EPS guidance for the

balance of this fiscal year

* Says planning for economic uncertainty to continue through the remainder of

the fiscal year

* Says offers operating expense guidance of approximately $27.4 billion for the

full year ending June 30, 2009

* Says will eliminate up to 5,000 jobs in research and development, marketing,

sales, finance, legal, hr, and it over the next 18 months

* Says initiatives will reduce the company's annual operating expense run rate

by approximately $1.5 billion

* Says reduce fiscal year 2009 capital expenditures by $700 million

* Says operating expense guidance of approximately $27.4 billion for the full

year ending June 30, 2009

* Reuters Estimates Q2 earnings per share view $0.49, revenue view $17,082.44

million

* Sees lower revenue and earnings for the second half relative to the previous

year

* Says costs of implementation and employee severance will be included in Q3