Microsoft had also recently taken the decision to cut 10,000 employees owing to the health of the global economy
Microsoft on Tuesday reports its slowest sales growth in six years with a 12% drop in profit for the fourth quarter. The demand for the company’s software and cloud services decreased due to economic instabilities. Microsoft had also recently taken the decision to cut 10,000 employees owing to the health of the global economy.
According to the reports, the company had earned $2.32 a share, apart from the severance amount paid to the laid-off employees, leading the wall street earnings for adjusted earnings. Even though the quarter profits were a matter of concern for the company, the news cheered its stocks, which were up more than 4% in extended trading after its earnings reports were announced.
Employee Sacking and Strategic Investments
The previous week saw another tech giant joining the long list of companies getting ready to lay off around 10,000 employees as a part of cost-cutting measures. Satya Nadella, Microsoft CEO said that the company was not impervious to a weaker global economy at the World Economic Forum in Davos. Microsoft had more than 220,000 employees and the job cut would correspond to less than 5% of the company’s total workforce. Microsoft this week attributed its decision to reduce nearly 5% of its global workforce citing “macroeconomic factors and shifting customer priorities.”
It is one of many tech firms to announce mass layoffs, including Google, Amazon, Salesforce, and Facebook parent company Meta. Regardless of the fact that the company is currently on the path of adopting cost-cutting measures, they are making strategic investments in Open AI. The company has also announced its decision to move forward with its multi-billion-dollar investment in Open AI and mark the third phase of the partnership between the two companies. This renewed partnership will be a revolution in AI, commercializing advanced technologies in the future.
Microsoft posted a revenue of around $52 billion during the October-December period its second fiscal quarter, up 2% from the same period a year ago. The company on Tuesday also announced a drop in the quarterly sales of its personnel computing business, which is centered on its Windows software due to a drastic reduction in demands and economic uncertainties.
The market research firm Gartner has also reported that PC shipments in the past quarter dropped around 28% compared to the statistics of 2021 which is the sharpest quarter decline. Inflation, impending threats of global recession, and higher interest rates could possibly be some of the reasons why the demand for PC has declined, cited Gartner.
Experts were closely observing Microsoft’s other major business sectors, like its cloud computing division, where sales increased to $21.51 billion, owing to the PC market’s weakness. The Office product line is included in the company’s workplace software sector, which had a 7% increase in revenue.