I know this question will make me unpopular in the tcs community, on which my future livelihood may depend , and I know it's probably a sensitive, possibly even offensive to some people, question ... but it seems to me odd that while this issue has received so much attention, I had not seen this obvious question addressed once. Does it really pay off for microsoft to hire pure theory researchers?
I talked to a friend who is in msr - but in computer vision. His opinion was:
- The theory part of msr was started as part of Bill Gates's philantropic project, not as a strategic business decision of Microsoft.
- If a researcher at msr theory comes up with an amazing revolutionary idea that is worth implementing and publishes it, Microsoft could implement it just the same after he publishes it if he was not from msr, and
then wouldn't have to pay his salary all those years.

(I agree that the suddenness of the layoffs, to people whose options are in academia and can't hop to the next IT company the month after, has an ugly element)

http://thmatters.wordpress.com/2014/10/14/letter-re-closing-of-microsoft-research-silicon-valley/