Satya Nadella, Microsoft Chairman and CEO, speaks during a press briefing at the company’s campus in Redmond, Washington, May 20, 2024.
Jason Redmond | AFP | getty images
microsoft The company confirmed to CNBC on Wednesday that it is cutting a small number of jobs across departments based on performance.
“Microsoft is focused on high-performing talent,” a Microsoft spokesperson said in an email to CNBC on Wednesday. “We are always trying to help people learn and grow. When people are not performing, we take appropriate action.”
Business Insider reported on the plans late Tuesday.
A person familiar with the matter, who asked not to be named to discuss privacy, said the job cuts would affect less than 1% of employees.
Microsoft had 228,000 employees as of the end of June. The company’s net profit margin is nearly 38%, close to its highest since the early 2000s, but Microsoft’s stock has risen 12% over the past year, while Nasdaq’s has risen 29%, underperforming its peers.
Microsoft’s latest cuts pale in comparison to recent downsizing efforts.
In early 2023, the company laid off 10,000 employees and consolidated its lease agreements. In January 2024, three months after completing its $75.4 billion acquisition of Activision Blizzard, Microsoft’s gaming division cut 1,900 jobs to reduce redundancies.
As 2025 begins, Microsoft faces an even weaker relationship with OpenAI, an artificial intelligence startup that has raised more than $13 billion in funding. This partnership helped Microsoft’s market capitalization exceed $3 trillion last year.
Over the summer, Microsoft added OpenAI to its list of competitors. Microsoft CEO Satya Nadella used the expression ‘collaborative tension’ while discussing his relationship with investors Brad Gerstner and Bill Gurley in a podcast released last month.
Meanwhile, the Microsoft 365 Copilot assistant, which leverages OpenAI technology, is not yet widely available to businesses. Analysts at UBS wrote in a note last month that they got the impression that the Copilot rollout at Microsoft’s Ignite conference was “a bit slow or underwhelming.”
Microsoft is still touting growth opportunities. Finance chief Amy Hood said in October that revenue growth in Microsoft’s Azure cloud will accelerate in the first half of the year as AI infrastructure capacity expands.