Now Microsoft has announced it will lay off about 6,000 workers, which is just under 3% of its workforce. This decision, revealed on Tuesday, comes despite the company reporting a substantial quarterly net income of $25.8 billion and an optimistic forecast earlier this year. Reducing force The layoffs are expected to touch employees at every level, team and within all global offices.
The massive public announcement stands in stark juxtaposition to the financial reports released by competitor Microsoft last week. Just in late April, the company was forecasting growth. That’s why its shares surged, allowing the stock to hit an all-time trading high of $449.26, the highest in 2023. Even with those promising numbers, Microsoft had some trouble with its Azure cloud revenue growth. It was underwhelming and largely missing out on the positive impacts of artificial intelligence measures.
This explains why, as Microsoft CEO Satya Nadella acknowledged, sales execution changes became needed with these surprise slow growth numbers. He stressed the need to constantly reexamine the company’s go-to-market strategies. He posed the question, “How do we deliberately change the incentives and our sort of go-to-market strategy?” Notably, this illustrates Microsoft’s desire to recalibrate its business in response to changing market expectations.
Given these headwinds, the firm is looking to cut multiple layers of management in its latest round of rebuilding. A Microsoft spokesperson stated, “We continue to implement organizational changes necessary to best position the company for success in a dynamic marketplace.” That means a newfound focus on not just revenue but operationalizing everything to maximize efficiency and improve the customer experience.
Despite the layoffs, Microsoft’s stock remains robust. The shares have recently closed at an all-time high of $467.56 last July, reflecting the strong belief of investors in the company’s long-term strategy. The buoyant financial report and six-month turnaround forecast had led industry watchers to believe that Microsoft was on a sure course down the high road to prosperity. Those layoffs are a sign that the company is preemptively acting to meet new challenges before they arise.
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