Microsoft is expected to reveal that it failed to hit its profit targets for the final quarter of 2008, which will results in thousands of job losses, say analysts.

Jefferies & Co analyst Katherine Egbert told Reuters: "All eyes are on the forecast. Expectations for the guidance are pretty low."

Analysts are currently predicting Microsoft's profit will be $0.49 per share, which is below the $0.51 to $0.53 Microsoft had forecast. The company's quarterly revenue is also expected to be down, with Wall Street predicting $17.1bn compared to the $17.3 to $17.8bn Microsoft initially predicted.

Egbert says Microsoft will report sales of Windows have dropped by 3 percent compared to the previous year.

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Reuters Estimates has revealed it expects Microsoft's yearly income to be $17.7bn - that's 10 percent less than forecast while revenue will be down 4.4 percent on the estimated figures to $63.68bn.

Microsoft is also expected to announce job cuts. Rumours have been circulating that Microsoft will start laying off staff for a number of weeks. "Checks indicate that Microsoft is likely to engage in headcount reductions to the tune of 6,000 to 8,000 employees or 6 to 8 percent of its 95,000 workforce," McAdams Wright Ragen analyst Sid Parakh told Reuters.

"Our checks also revealed some speculation over the potential for a second round of cuts in some groups sometime later in the year."

However, some analysts believe Microsoft will opt to reduce costs rather than lay-off employees.

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