Microsoft Confirms More Job Cuts This Week and Wall Street Shrugs
Key Takeaways
- Microsoft cut a small amount of its workforce this week, in addition to the 10,000 staff laid off in January
- Microsoft — like Amazon, Google, and other large tech companies — has scaled back its workforce with multiple rounds of layoffs this year after a pandemic hiring spree
- These layoffs come at the start of Microsoft’s fiscal year
Microsoft laid off an unspecified number of employees this week. This is separate from a round of layoffs in January that impacted 10,000 Microsoft employees.
“Organizational and workforce adjustments are a necessary and regular part of managing our business. We will continue to prioritize and invest in strategic growth areas for our future and in support of our customers and partners,” a spokesperson for Microsoft said in a statement.
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What we know about the Microsoft layoffs:
Though Microsoft did not confirm specifics, LinkedIn posts suggest customer service, sales, and support were most affected. A reported 276 Washington state-based employees were part of the layoff.
This cost-cutting initiative seems separate from Microsoft’s larger round of layoffs in January. It’s worth noting that Microsoft has reduced staff at this time of year before. Last July, the company conducted a round of layoffs that impacted less than 1% of its workforce.
This year has seen layoffs across the tech sector as companies slimmed down after staffing up during the pandemic. According to data from TechCrunch, these layoffs peaked in January and have since steadily slowed, but not stopped.
Wall Street’s reaction:
Microsoft stock is up +4.96% today, suggesting a continued winning streak in spite of this layoff news. Microsoft shares have returned 38.4% in the past six months, in part because the company is investing heavily in AI. On Tuesday, KPMG announced it will invest at least $2 billion over the next five years with Microsoft to develop cloud and generative AI tools.
Microsoft CEO Satya Nadella shared ambitions to hit $500 billion in revenue by 2030 in a memo to staff, which is more than double where it is today. That memo became public during the federal court hearing over Microsoft’s potential acquisition of Activision Blizzard — yet another big move by the company.
With so much going on at Microsoft HQ, investors are keen for the company’s next earnings report on July 25th.
The bottom line
Microsoft’s recent layoffs are likely a strategic response to current business needs and a small shift to align with internal reprioritization. At this time, the cuts don’t seem to indicate a larger slowdown for the tech giant. If anything, Microsoft is full steam ahead in high-growth areas.
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