On Tuesday, Microsoft announced a reduction of its workforce by 3% across all levels, teams, and regions, impacting approximately 6,000 employees. A spokesperson for the company stated to CNBC, ‘We are continuing to make organizational adjustments that are essential for positioning the company for success in a rapidly changing market.
Despite this, Microsoft reported quarterly net income of $25.8 billion, exceeding expectations, along with a positive outlook shared in late April. As of the end of June, Microsoft employed 228,000 individuals globally. The state of Washington reported that the company is cutting 1,985 positions associated with its Redmond headquarters, which includes 1,510 office roles.
This marks what is likely Microsoft’s most significant layoff since the elimination of 10,000 positions in 2023. Earlier in January, the company had announced a smaller, performance-based layoff, but the current job reductions are not linked to employee performance, according to the spokesperson.
One of the goals is to streamline management levels, as stated by the spokesperson. In January, Amazon revealed plans to eliminate certain positions after identifying ‘unnecessary layers’ within its structure.
Last week, CrowdStrike, a cybersecurity software firm, announced a reduction of 5% in its workforce. In January, Microsoft CEO Satya Nadella informed analysts that the company would implement changes in sales execution following slower-than-anticipated growth in Azure cloud revenue, which was not associated with artificial intelligence.
The performance of AI cloud growth exceeded internal expectations. ‘How do you effectively adjust the incentives and go-to-market strategy?’ Nadella inquired. ‘During periods of platform transitions, it is essential to focus on new design wins rather than continuing with outdated practices.’ On Monday, Microsoft shares concluded trading at $449.26, marking the highest price this year, compared to a record close of $467.56 last July.
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