Microsoft Announces Laying Off 10,000 Employees, Share Prices Dip By 1%

Microsoft announced on Wednesday that it is going to let go of its employees. The tech giant has confirmed that it is to lay off 10,000 of its workers.

10,000 Employees to be Laid Off

According to the officials, they are going to lay off the mentioned number of workers throughout the first quarter of 2023.

The company has hinted that they are seeing signs of the country moving into recession in the upcoming months. The economic situation is going to go bad in the United States and then the rest of the world.

As a result, their revenue growth is going to slow down. This is the reason why they had to make the call at the right time to let go of their employees.

By reducing its employee base the company is going to try and cut down on its costs. With the revenue growth slowing down, the company has to make the difficult decision of laying off its employees.

The officials also communicated that for the fiscal second quarter, they are getting ready to take a $1.2 billion charge.

As they go for the $1.2 billion charge, they are going to take a negative hit on their adjusted earnings. It is going to hit their adjusted earnings with negative 12 cents per share.

Microsoft Joins the List

Microsoft is not the only company that has started preparing itself for the worst-case scenario in the year 2023. Other companies such as Salesforce, Amazon, and Alphabet are also doing the same.

These companies have also announced laying off employees. Some of these companies have already laid off employees and plan on continuing with their decision until they reach the designated figure.

The reason behind the Contraction

There was a time when the demand for employees and workers was very high.

However, as the pandemic engulfed the entire world, collaboration and cloud computing services picked up the pace.

The schools, government agencies, and enterprises moved to the remote work models and they are still sticking with them.

Many institutes and industries have realized that so many costs could be saved if their workers were allowed to operate remotely.

With the focus surging towards cloud computing services, the demand for on-ground and other kinds of man-power related services has lost their attraction.

Another major reason is the constantly rising prices that have started to push companies to a corner. Even the forex rates are causing a lot of problems for the companies in terms of their earnings and revenues.

Due to the economic downfall, people are smartly making investments or buying products that are almost a necessity.

With disposable salaries becoming a scarcity, people are spending less on electronic hardware or gadgets.

Microsoft makes a major portion of its revenue from the sale of electronic hardware followed by software that goes with them.

With demand going low and expected to go lower, the company has decided to make a difficult decision and is going to lay off employees.

Tech Stocks were at the Top in 2021

As the pandemic began and entered the year 2021, it was the tech sector that benefited the most from it.

Being one of the largest cloud-based service providers, Microsoft saw its market capitalization surge over $2 trillion for the first time since its public debut.

However, as the impact of the pandemic has finally faded away and things are getting back to normal, its business is losing attraction.

With people moving back to the pre-pandemic ways, the situation for the tech giant is worsening. It simply adds to the already-worsening situation being witnessed by Microsoft.

After making the announcement, the share prices for Microsoft have taken a hit. The share prices for the tech company have slid by 1%. At the time of writing, the company’s shares are trading at $238.40 per share.