Last Updated on January 19, 2023 by Bitfinsider
Microsoft Corp (MSFT.O) announced on Wednesday that it will cut 10,000 jobs and incur a $1.2-billion charge as its cloud-computing clients scrutinize their spending and the business prepares for a possible recession.
The layoffs, which are significantly more than those made by Microsoft last year, add to the tens of thousands of job losses in the IT sector, which has long outgrown its period of unceasing expansion during the epidemic.
In a statement to staff, CEO Satya Nadella stated that the layoffs, which would effect fewer than 5% of the workforce, would be completed by the end of March, with notifications commencing on Wednesday.
The timing overlaps with the period Amazon.com Inc (AMZN.O) announced further layoffs in its own 18,000-person layoffs.
Customers wanted to “optimize their digital expenditure to achieve more with less,” according to Nadella, and “exercise prudence since certain regions of the world are in a recession and others are anticipating one.” Palantir Technologies Inc (PLTR.N), another enterprise-focused startup, said this week that cutting cloud expenditure was a top ten concern for its clients.
In addition to severance expenses, Microsoft will incur a billion-dollar charge as a result of changes to its hardware product selection and lease consolidations “as we generate increased density throughout our workplaces,” Nadella said.
According to Microsoft, the charge in the second quarter of fiscal 2023 will have a negative impact of 12 cents per share earnings.
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