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Tech giant Microsoft said it is cutting 10,000 jobs, representing about 5% of its global workforce, in an effort to cut costs amid signs of an economic slowdown.

Microsoft CEO Satya Nadella announced the layoffs in a memo to staff Wednesday, which the company disclosed in an SEC filing. The job cuts will occur through the end of Microsoft’s third quarter of fiscal 2023, which ends March 31. Some employees are being notified today that they’re losing their jobs, Nadella wrote.

In addition to the layoffs, Microsoft is taking other cost-cutting actions, including making “changes to our hardware portfolio” — which it didn’t detail — and consolidating building leases “to create higher density across our workspaces,” the company said in the SEC filing. All together, Microsoft said the moves will result in a charge of $1.2 billion for the December 2022 quarter, representing a 12 cent/share hit to diluted earnings.

“These are the kinds of hard choices we have made throughout our 47-year history to remain a consequential company in this industry that is unforgiving to anyone who doesn’t adapt to platform shifts,” Nadella wrote in the companywide memo.

Microsoft’s mass layoffs are the latest to sock the tech sector. Amazon this month announced that it will eliminate “just over” 18,000 positions, and Salesforce said it is pink-slipping 8,000 (10% of its employee base). Last fall, Meta last fall said it would lay off 11,000 workers to prune headcount by 13%.

While Microsoft saw customers accelerate their digital spend during the pandemic, according to Nadella, “we’re now seeing them optimize their digital spend to do more with less.” He added that the company is “seeing organizations in every industry and geography exercise caution as some parts of the world are in a recession and other parts are anticipating one.”

Microsoft had hired roughly 75,000 employees since 2019 as the company “needed to aggressively hire along with the rest of the tech sector and spend money like 1980s rock stars to keep pace with eye-popping demand,” Wedbush Securities analyst Dan Ives wrote in a research note Wednesday. “We are seeing the clock strike midnight for the tech sector after a decade of hyper growth and now major layoffs are being seen at MSFT, Salesforce, Meta, Amazon, among many others across the Valley.” Wedbush is maintaining its “outperform” rating on Microsoft, with a $290/share 12-month price target.

Microsoft is eliminating roles in some areas but “we will continue to hire in key strategic areas,” Nadella noted. The industry is seeing the next major wave of computing “being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform.”

Microsoft is scheduled to release Q2 FY23 financial results after the close of the market on Tuesday, Jan. 24.

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