Microsoft is Cutting 3% of All Workers(cnbc.com)
cnbc.com
Microsoft is Cutting 3% of All Workers
https://www.cnbc.com/2025/05/13/microsoft-is-cutting-3percent-of-workers-across-the-software-company.html
30 comments
When covid started a big name came to our office to announce cuts and saving plans. It was one hour townhall style meeting with everyone present to receive the news in person.
I was shocked and flabergasted that someone could stand in front of couple hundred people and tell them with the same breath that the situation is so dire that we have to stop using printers and we'd better start bringing our own toilet paper to the office, and complain that the company only made 2 billion last year, which is absolute disaster and the company won't surive if we won't adapt.
I was even more shocked when I approached fellow colleagues after the townhall, whom all seemed to completely swallow the pill - "you heard it? bollocks, right?" - "yeah, but you saw the charts, it's absolute disaster. I'm glad they took my bonus and let me keep my position".
I was shocked and flabergasted that someone could stand in front of couple hundred people and tell them with the same breath that the situation is so dire that we have to stop using printers and we'd better start bringing our own toilet paper to the office, and complain that the company only made 2 billion last year, which is absolute disaster and the company won't surive if we won't adapt.
I was even more shocked when I approached fellow colleagues after the townhall, whom all seemed to completely swallow the pill - "you heard it? bollocks, right?" - "yeah, but you saw the charts, it's absolute disaster. I'm glad they took my bonus and let me keep my position".
> what does that mean though.
The earnings call transcript is more useful than these stupid news articles - https://www.microsoft.com/en-us/Investor/earnings/FY-2025-Q2...
Basically Azure earnings were at the low end of their own projections. And their explanation was Azure non-AI services earnings have dropped as customers who have ongoing non-AI projects are working out how to incorporate AI services.
The earnings call transcript is more useful than these stupid news articles - https://www.microsoft.com/en-us/Investor/earnings/FY-2025-Q2...
Basically Azure earnings were at the low end of their own projections. And their explanation was Azure non-AI services earnings have dropped as customers who have ongoing non-AI projects are working out how to incorporate AI services.
Stratechery's interpretation of CFO Amy Hood's explanation seems to be the exact opposite of what you're saying: non-AI outperformed more than AI, which showed positive results mostly from early capacity being brought on pulling forward already established demand.
Stratechery:
Everyone is very excited about the big Azure beat, but CFO Amy Hood took care to be crystal clear on the earnings call that the AI numbers, to the extent they beat, were simply because a bit more capacity came on line earlier than expected; the actual beat was in plain old cloud computing. From Hood’s prepared remarks:
Focused execution drove non-AI services results where we saw accelerated growth in our enterprise customer segment, as well as some improvement in our scale motions. And in Azure AI services, we brought capacity online faster than expected.
Hood further clarified in response to a question:
Just to provide some clarity because I think your question implies something that we didn’t mean to imply on the call. First, the real outperformance in Azure this quarter was in our non-AI business. So then to talk about the AI business, really, what was better was precisely what we said. We talked about this. We knew Q3 that we had and hadn’t really match supply and demand pretty carefully and didn’t expect to do much better than we had guided to on the AI side. We’ve been quite consistent on that.
So the only real upside we saw on the AI side of the business was that we were able to deliver supply early to a number of customers. And being able to do that throughout the quarter creates quite a good benefit to us. But the majority of our outperformance versus where we had expected to be was on the non-AI piece of the business.
Stratechery:
Everyone is very excited about the big Azure beat, but CFO Amy Hood took care to be crystal clear on the earnings call that the AI numbers, to the extent they beat, were simply because a bit more capacity came on line earlier than expected; the actual beat was in plain old cloud computing. From Hood’s prepared remarks:
Focused execution drove non-AI services results where we saw accelerated growth in our enterprise customer segment, as well as some improvement in our scale motions. And in Azure AI services, we brought capacity online faster than expected.
Hood further clarified in response to a question:
Just to provide some clarity because I think your question implies something that we didn’t mean to imply on the call. First, the real outperformance in Azure this quarter was in our non-AI business. So then to talk about the AI business, really, what was better was precisely what we said. We talked about this. We knew Q3 that we had and hadn’t really match supply and demand pretty carefully and didn’t expect to do much better than we had guided to on the AI side. We’ve been quite consistent on that.
So the only real upside we saw on the AI side of the business was that we were able to deliver supply early to a number of customers. And being able to do that throughout the quarter creates quite a good benefit to us. But the majority of our outperformance versus where we had expected to be was on the non-AI piece of the business.
All FAANG (or whatever is the latest acronym) have layers and layers of middle management who not only don't do anything to build product or support customers but irritate and impede work by putting in nonsensical processes and rules. Counterintuitively, one should expect the quality and quantity of customer beneficial work to increase by eliminating them.
Somehow I doubt all 6,000 laid off will be from middle management.
Not saying you're completely wrong, but counterintuitively these middle management guys are spending most of their time playing LARPs with their peers to secure their projects, and by extent, jobs of people involved.
When an unassuming orc get ambushed by a couple of ambitious elves his budget gets chopped, you get fired, and he has limited time to find an alternative to stay afloat. And he's swimming in a much smaller pond than you. So trust me, they may not seem to bring much to the table on a daily basis, but they definitely play in your team.
Of course when the tide comes they will be the first to jump the ship and switch the team leaving you behind, but that's a different story.
When an unassuming orc get ambushed by a couple of ambitious elves his budget gets chopped, you get fired, and he has limited time to find an alternative to stay afloat. And he's swimming in a much smaller pond than you. So trust me, they may not seem to bring much to the table on a daily basis, but they definitely play in your team.
Of course when the tide comes they will be the first to jump the ship and switch the team leaving you behind, but that's a different story.
> "one objective is to reduce layers of management"
This seems a common theme: even in a company like Microsoft that takes pains to emphasize and support the IC track in addition to management there is a tendency towards creating layers that end up reducing agility.
Maybe it's just an excuse though. I am surprised they announced the 3% rather than just accomplishing it with attrition and slowing hiring. Maybe it looks smart to stockholders so they want the attention.
This seems a common theme: even in a company like Microsoft that takes pains to emphasize and support the IC track in addition to management there is a tendency towards creating layers that end up reducing agility.
Maybe it's just an excuse though. I am surprised they announced the 3% rather than just accomplishing it with attrition and slowing hiring. Maybe it looks smart to stockholders so they want the attention.
I know it's definitely been a theme in every org I've worked in. Higher level manager is unable to attend all meetings, so spawns a new lower level manager. Repeat. Then you're left with a hierarchy that is more about meeting attendance than actual enabling/planning/accountability, where having project leads would probably work just as well.
I wonder if this 3% is just their normal amount of attrition being dressed up in a way that stockholders will like.
3% of Microsoft’s estimated 250k employees is ~7000 people. You cannot hide such numbers from reporting.
It's roughly six thousand people's jobs (estimated base on headcount from last year), for anyone wondering. I don't know why they make you do the math, or provide such a fuzzy statistic.
I find percentages plenty useful, arguably more useful than raw numbers. If a company is laying off 3%, it's probably optimizing profits or shutting down failed projects. At 10%, they might be responding to some longer term issue. At 25%, they are in some kind of serious trouble.
3% here and there over multiple years suggests they (feel) they are in some kind of serious trouble.
> I don't know why they make you do the math, or provide such a fuzzy statistic.
Because uncalculated 3% is a smaller number than 6000?
Because uncalculated 3% is a smaller number than 6000?
The intended effect may have been the opposite. Maybe many people thing Microsoft is a much larger company and that 3% sounds more significant than 6000.
The WARN act website lists the number at 1,985 employees.
https://esd.wa.gov/employer-requirements/layoffs-and-employe...
https://esd.wa.gov/employer-requirements/layoffs-and-employe...
Does that account for global layoffs? Or onlu US layoffs
Per that link it appears to just be the number for Redmond, WA, USA.
How much is that? A finger? A foot?
McKinsey hungers for flesh
The brains
A cut... probably the 10th or so cut out of many more to come.
It's in the first sentence of the article.
... what MS workers do anyway? Apart from selling licenses.
> ... what MS workers do anyway? Apart from selling licenses.
Well, let's see: Rounding corners of buttons and window borders, making bigger titlebars for Office programs and increasing space between GUI elements, adding one more click to access the menu in Win 11, adding an useless "theme" setting with "default", "dark" or "light", where "default" can be either "dark" or "light". I think they call this innovative UX/UI, increasing startup time for all programs, etc.
Well, let's see: Rounding corners of buttons and window borders, making bigger titlebars for Office programs and increasing space between GUI elements, adding one more click to access the menu in Win 11, adding an useless "theme" setting with "default", "dark" or "light", where "default" can be either "dark" or "light". I think they call this innovative UX/UI, increasing startup time for all programs, etc.
I wrote code when I worked there.
And did you succeed? Few does nowadays. Little good if any is shown in the results. Looks like marketing and sales guys pushed around by management is the business there for very long. Sometimes to f up the user experience, they must have a very dedicated and talented specialist group for that there, they are goood in that!
Ok, sure, what does that mean though.
> The company reported better-than-expected results, with $25.8 billion in quarterly net income, and an upbeat forecast in late April.
Agree! Better tighten the belt. Don’t want to dip below $100 billion net income a year.