According to sources speaking with ZDNet's resident Microsoft blogger, Mary-Jo Foley, "the bulk of [Microsoft's]immediate 1,400-person cuts" are going to fall on the Entertainment & Devices Group. Which includes the Xbox team.
The E&D Group also includes Zune and Windows Mobile, so losses would presumably be spread across all three. While we're not terribly interested in either of those, we are interested in potential cuts to the Xbox team, particularly since we've already seen two instances of that today in the sackings at Gamerscore and ACES.
If Foley's sources are to be believed, though, a blog and the Flight Sim guys might only be the start. We'll no doubt hear more in the coming days.