We’ve got out hands on the full memo from Microsoft CEO Steve Ballmer to the company’s employees.

The full text is below, but I want to highlight some of the tough measure Microsoft is putting in place in order to reduce expenses:

To increase efficiency, we’re taking a series of aggressive steps. We’ll cut travel expenditures 20 percent and make significant reductions in spending on vendors and contingent staff. We’ve scaled back Puget Sound campus expansion and reduced marketing budgets. We’ll also reduce costs by eliminating merit increases for FY10 that would have taken effect in September of this calendar year.

I’m sure folks are glad to still have a job, but it looks like salaries will be frozen for the time being.

The full memo:

Microsoft missed Wall Street estimates for its quarterly earnings and announced it would cut 5,000 jobs, but I don’t believe either of these two factors play a major role in the 8% share drop this morning.

I’ll tell you why and then I’ll tell you what’s really accounting for the decline in PPS (price per share) today.

First, the earnings miss. OK, so MSFT missed Wall Street expectations by 2 cents and its profit dropped from $4.71 billion this time last last year to $4.17 billion. But, it’s overall revenue grew from $16.63 billion to $17.1 billion in the same period. So, that suggests that the money is coming in, it’s just that Microsoft needs to shed some excess baggage expenses.

By Carrie Hill

Tomorrow after the market closes, Google will release their earnings report and it looks like they’re racing to make that bottom line look more appealing to investors.  Let’s break down the issues for stock-market-novices like myself.

As Andy reported earlier this week, search spending was down around 8% for the 4th quarter—but according to an article in MediaPost, the clicks are still coming in. Ad pricing is declining to keep people spending money on the revenue model.  The shoppers are still there, but making the end-sale is a now bit more difficult and people are more reluctant to invest in PPC when the cost per conversion is rising—hence the drop in cost per click rates. 

For the past couple of years, Google has worked hard to try and convince the world that it’s not a one-trick pony. Today, it admits that its enormous success with paid search ads does not mean it can dominate other marketing channels.

In other words, it’s shutting down Google Print Ads.

While we hoped that Print Ads would create a new revenue stream for newspapers and produce more relevant advertising for consumers, the product has not created the impact that we — or our partners — wanted. As a result, we will stop offering Print Ads on February 28. For advertisers who have campaigns already booked, we will place their ads through March 31.

Translation? You were right, we were wrong…..neighhhhhhh!

(hat-tip)