Microsoft plans to slash £820m costs

COMPUTER software giant Microsoft is planning to cut costs by $1bn (£820m) annually as its expenses have grown faster than revenues for three years running, The Wall Street Journal reported.

Chief executive Steve Ballmer has sent a memo to the company's employees promising, along with the cuts, stepped-up innovation to boost sales and the share price.

The company is facing a £143m legal bill from its $1.1bn settlement of a class-action lawsuit in California last year, one of the highest amounts ever paid to lawyers in such a case.

Lawyers at a San Francisco-based legal firm are asking for as much as $3,000 an hour.

Technical experts at the group are alos working flat out to prevent a new security threat that could give criminals access to computer systems used worldwide by banks and governments.