Microsoft confirmed to CNBC on Wednesday that it is reducing a small percentage of jobs across departments based on performance.
A Microsoft representative told CNBC via email on Wednesday that the company prioritizes high-performance individuals. We’re constantly trying to help folks develop and learn. We respond appropriately when individuals fail to perform.
Late Tuesday, Business Insider published a report on the plans.
Less than 1% of workers will be impacted by the layoffs, according to a person with knowledge of the situation who asked not to be identified in order to protect confidential information.
At the close of June, Microsoft employed 228,000 people. Microsoft’s stock underperformed its rivals last year, climbing 12% while the Nasdaq gained 29%, despite the company’s net income margin of over 38% being close to its highest since the early 2000s.
When compared to other downsizing initiatives, Microsoft’s most recent layoffs are minimal.
The corporation consolidated leases and laid off 10,000 workers at the beginning of 2023. Three months after closing the $75.4 billion Activision Blizzard acquisition, Microsoft’s gaming division laid off 1,900 employees in January 2024 in an effort to cut down on overlap.
Microsoft’s relationship with OpenAI, an artificial intelligence business that it has invested more than $13 billion in, is becoming more precarious as 2025 gets underway. Last year, the alliance helped push Microsoft’s market capitalization above $3 trillion.
Microsoft expanded its list of rivals to include OpenAI over the summer. In a podcast that was broadcast last month, Microsoft CEO Satya Nadella used the term “cooperation tension” to describe the relationship with investors Brad Gerstner and Bill Gurley.
In the meantime, the OpenAI-powered Microsoft 365 Copilot assistant is still relatively new to the business world. In a report last month, UBS analysts expressed their opinion that Copilot rollouts have been a little delayed and unimpressive after attending Microsoft’s Ignite conference.
Microsoft continues to highlight its prospects for expansion. Amy Hood, the head of finance, stated in October that increased capacity for AI infrastructure would accelerate revenue growth from Microsoft’s Azure cloud in the first half of this year.
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