Given the Kin's recent belly-flop and Microsoft's somewhat lackluster performance (Apple recently bruised the giant by overtaking its total net worth) one might imagine the cuts would come to areas that have suffered recent public humiliation. However, rumors so far suggest that marketing positions are being targeted. Comments from posters on Mini-Microsoft, an unofficial Microsoft employee blog, indicate that at least some cutbacks have also occurred in other parts of the company. Because this is not a mass downsizing, Microsoft isn't likely to issue a press release on the matter – and that means only Microsoft HR knows how many people were cut and from where.
In any case, the sky is not falling in Redmond, although it is no doubt a dark day for those who got the axe.