According to Microsoft, the cost of the layoffs, changes to the hardware portfolio, and other expenses will cost $1.2 billion in the second quarter of fiscal 2023, which will have a negative effect on earnings per share of 12 cents. Over the past year, Microsoft stock has decreased by 22%.
Microsoft CEO Satya Nadella stated that consumers wanted to “optimize their digital spend to achieve more with less” and “exercise care since some parts of the world are in a recession and other sections are anticipating one” in a memo to staff that was shared with Reuters.
According to Axios, the Redmond-based company already announced layoffs in October, resulting in the loss of up to 1,000 positions. Microsoft let go about 1% of its workers in July. The business stated in May that hiring in its Windows, Office, and Teams businesses will be slowed.
The greatest fall in PC shipments since the company started keeping track of them in the middle of the 1990s, according to research firm Gartner, occurred in the fourth quarter of 2022.
ChatGPT is coming soon to the Azure OpenAI Service, which is now generally available, as we help customers apply the world’s most advanced AI models to their own business imperatives. https://t.co/kQwydRWWnZ
– Satya Nadella (@satyanadella) January 17, 2023
Satya Nadella’s letter to employees reads-“First, we will align our cost structure with our revenue and where we see customer demand. Today, we are making changes that will result in the reduction of our overall workforce by 10,000 jobs through the end of FY23 Q3. This represents less than 5 percent of our total employee base, with some notifications happening today. It’s important to note that while we are eliminating roles in some areas, we will continue to hire in key strategic areas. We know this is a challenging time for each person impacted. The senior leadership team and I are committed that as we go through this process, we will do so in the most thoughtful and transparent way possible.
Second, we will continue to invest in strategic areas for our future, meaning we are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company, while divesting in other areas. These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts. As such, we are taking a $1.2 billion charge in Q2 related to severance costs, changes to our hardware portfolio, and the cost of lease consolidation as we create higher density across our workspaces.” Source Microsoft
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