Update: Microsoft Issues Mea Culpa On Severance Glitch

Microsoft last month laid off 1,400 employees and revealed plans to part ways with 3,600 more over the next 18 months as part of a $1.5 billion cost-cutting effort. On Feb. 18, Microsoft's human resources department sent out letters to the 25 laid-off workers informing them that they'd been overpaid in their severance packages and asking them to repay the difference within two weeks.

But Microsoft now says it won't be seeking reimbursement from the overpaid ex-employees. "This was a mistake on our part. We should have handled this situation in a more thoughtful manner," a Microsoft spokesperson said in an e-mail. "We are reaching out to those impacted to relay that we will not seek any payment from those individuals."

Last month's layoffs -- which represented the largest workforce reduction in Microsoft's history -- affected research and development, marketing, sales, finance, legal, human resources and IT operations.

Microsoft expects the moves to reduce capital expenditures for fiscal 2009 by $700 million, and the company also will cut spending on outside vendors and contingent staff, facilities and capital expenditures.