Microsoft: Harbinger of recession – employees are being laid off

Shortly after the start of its new fiscal year (from July 2022), Microsoft laid off around one percent of its 181,000 employees. A message that investors do not like at all. Microsoft shares fell around four percent on Tuesday, but stabilized somewhat in premarket Wednesday trading.

Microsoft is not the only tech company to recently announce a hiring freeze or layoffs. A statement from the software giant said: “This is the result of a strategic realignment as, like all companies, we regularly re-evaluate our business. However, we will continue to invest in certain areas in the future and increase the number of employees there.”

One area where this is likely to be the case is in the cloud business. Because the infrastructure service Azure is unlikely to lose any of its growth momentum even in the event of a recession. For example, analysts at JPMorgan wrote in a study on Tuesday that global cloud spending is likely to accelerate to 22 percent in the second half of the year – despite hardware supply problems and a shortage of well-trained specialists.

Consumer business less rosy

Away from the cloud, however, the outlook has not only clouded over due to the latest sales warning. The gaming business remains under pressure due to the continued low availability of Xbox X/S consoles and a slowdown in the corona boom.

Recently, there has also been little positive news for the Windows and Office business. According to market researchers from Gartner, demand for consumer PCs will fall by 13.1 percent in the current year, significantly more than the 7.2 percent drop in demand for company PCs.

The bad news situation is putting pressure on the Microsoft share price development. However, the unchanged good prospects in the cloud, a moat around the Office and Windows cash cows and a strong balance sheet still speak for a long-term investment in Microsoft.

#Microsoft #Harbinger #recession #employees #laid

Leave a Comment

Your email address will not be published.