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Microsoft to cut 10,000 jobs, as PC sales, cloud growth decline

Microsoft (MSFT) announced on Wednesday that it is laying off 10,000 workers as part of an effort to cut costs at the tech behemoth. The layoffs impact roughly 4.5% of Microsoft’s 221,000 total employees.

The cuts are expected to be completed by Microsoft's fiscal Q3, which ends March 31. Microsoft says the layoffs will result in a $1.2 billion charge, representing -$0.12 per share.

The Redmond-based company previously announced layoffs in October, shedding as many as 1,000 jobs, according to Axios. In July, Microsoft laid off approximately 1% of its workforce. In May, the company announced it was slowing hiring in its Windows, Office, and Teams divisions.

"As we saw customers accelerate their digital spend during the pandemic, we’re now seeing them optimize their digital spend to do more with less," Microsoft CEO Satya Nadella said in a statement.

"We’re also 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. At the same time, the next major wave of computing is being born with advances in AI, as we’re turning the world’s most advanced models into a new computing platform."

According to Nadella, Microsoft will continue to hire in strategic roles despite the layoffs.

"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," he said.

Microsoft is battling slowing PC sales compared to during the pandemic when consumers snatched up new desktops and laptops in droves to do everything from work and take remote classes to play games.

According to research firm Gartner, worldwide PC shipments declined a staggering 28.5% in the fourth quarter of 2022, the largest decline since the company began tracking shipments in the mid-1990s.

FILE- In this May 7, 2018, file photo Microsoft CEO Satya Nadella looks on during a video as he delivers the keynote address at Build, the company's annual conference for software developers in Seattle. Microsoft is requesting the Federal Election Commission's advisory opinion to make sure Microsoft's new free package of online account security protections for
Microsoft CEO Satya Nadella. (AP Photo/Elaine Thompson, File)

To that end, Microsoft says it will be making changes to its hardware offerings, though it hasn't gone into exactly what that will entail. Microsoft offers its own Surface line of laptops and desktops, as well as a dual-screen smartphone.

It’s not just PC sales, though. Microsoft and rival Amazon (AMZN) are also dealing with a slowdown in the cloud industry, as customers continue to work through high inflation and interest rates. In October, Microsoft reported it expects Q2 cloud growth to decrease. In Q1, cloud growth declined from 31% year-over-year in 2021 to 20% year-over-year.

Shares of Microsoft are down 22% over the last year.

Microsoft’s announcement follows similar moves by other Big Tech firms. Earlier this month, Amazon began laying off some 18,000 workers. Meta (META), meanwhile, cut 11,000 jobs in November.

Note: This story is breaking and will be updated.

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