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Microsoft just announced a massive layoff

By:
on Jan 18, 2023
Updated: Feb 1, 2023
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  • Microsoft says it plans on cutting 10,000 of its employees.
  • The said layoff is expected to result in a $1.20 billion charge.
  • Guggenheim downgraded Microsoft stock to sell this week.

Microsoft Corporation (NASDAQ: MSFT), on Wednesday, announced plans of significantly lowering its global headcount to prepare for an imminent slowdown in revenue growth.

Despite recent layoffs, businesses still require talented employees to succeed. If there is a company where you want to work and they have open positions, now is a good time to apply. In this post, Lensa discusses whether you should apply for a job at a company that has recently laid off employees.

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How many of its employees are at risk?

The layoff that it plans on executing through March 31st will affect roughly 10,000 of its employees and will result in a $1.20 billion charge. In a memo to employees, CEO Satya Nadella said:

We’re now seeing customers optimise their digital spend to do more with less. We’re also seeing organisations in every industry and geography exercise caution as some parts of the world are in a recession and other are anticipating one.

For its current financial quarter, the multinational tech behemoth is calling for a 2.0% annualised growth in revenue – the slowest rate in about seven years.  

Microsoft stock is currently down more than 15% since its high in mid-August. Last week, Invezz reported the Nasdaq-listed firm to be interested in spending another $10 billion on ChatGPT parent OpenAI.

Should you buy Microsoft stock now?

The layoff announced this morning is remarkably bigger than a less than 1.0% cut it executed in July of 2022. Microsoft had let go of another several hundred employees in October as well. CEO Nadella added:

I’m confident Microsoft will emerge from this stronger and more competitive. But it requires [that we] align our cost structure with our revenue, invest in strategic areas for our future, and act transparently.

The said job cut represents less than 5.0% of the company’s current workforce.

Earlier this year, Guggenheim analyst John DiFucci downgraded Microsoft stock to “sell” and announced a $212 price target that represents a more than 10% downside from here. He’s concerned that the tech titan isn’t as immune to a recession as many believe.