Shares of the Redmond, Washington-based company fell 2 percent on Wednesday.
The announcement coincides with the start of layoffs at its retail and cloud computing rival Amazon.com Inc ( AMZN.O ), which on Wednesday began notifying employees of its own 18,000 job cuts. .
In an internal memo seen by Reuters, Amazon said affected workers in the United States, Canada and Costa Rica would be notified by the end of the day. Employees in China will be notified after Chinese New Year.
Facebook parent Meta Platforms Inc ( META.O ) announced 11,000 job cuts, while cloud-based software company Salesforce Inc ( CRM.N ) said it would cut 80,000 of its workforce. will reduce by 10%.
In total, more than 97,000 job cuts were announced in tech in 2022, the most for the sector since 2002, when 131,000 cuts were announced, according to outplacement firm Challenger, Gray & Christmas. was announced.
“We haven’t seen this activity since the dot-com bust,” said Andrew Challenger, the company’s senior vice president.
Microsoft is laying off 878 full-time workers at its Redmond headquarters, according to an update on Washington State’s Worker Adjustment and Retraining Notification (WARN) page. Under US law, most employers are required to report staff reductions affecting 50 or more workers at a single location.
Reuters Graphics
Reduced cloud growth
Some analysts said Microsoft’s billion-dollar charge would cut profit by 12 cents per share in the company’s fiscal second quarter this year, and could ripple beyond the tech sector.
“There’s one of the marquee growth companies with a very distinct customer base that says maybe economic conditions aren’t as good as we thought,” said Brian Frank, a portfolio manager at Frank Funds. said Frank, who owns Microsoft stock on and off. over the past several years.
The charge is attributable to severance costs, as well as adjustments to Microsoft’s hardware lineup and lease consolidation to create higher-density workspaces, Nadella said.
Microsoft declined to detail the hardware changes or say whether it would stop manufacturing any product lines.
Microsoft’s cloud revenue has been boosted in recent years by an explosion in corporate demand to host data online and manage computing in the so-called cloud. But growth slowed to 35 percent in the first fiscal quarter of 2023, and the company plans to cool further in the near future. In July last year, it said that very few roles had been eliminated.