Microsoft Chairman and CEO Satya Nadella speaks at a press conference at the company's campus in Redmond, Washington, on May 20, 2024.
Jason Redmond | AFP | Getty Images
Microsoft is cutting a small percentage of jobs across departments based on performance, the company confirmed to CNBC on Wednesday.
“At Microsoft, we are focused on high-performing talent,” a Microsoft spokesperson said in an email to CNBC on Wednesday. “We are always working to help people learn and grow. When people don’t perform, we take appropriate action.”
Business Insider reported on the plans late Tuesday.
The job cuts will affect less than 1% of employees, said a person familiar with the matter who asked not to be identified to discuss private information.
Microsoft employed 228,000 people at the end of June. While the company's net profit margin is near its highest since the early 2000s, at nearly 38%, Microsoft stock underperformed its peers last year, rising 12% while the Nasdaq gained 29%.
Microsoft's recent cuts are small compared to its recent downsizing efforts.
In early 2023, the company laid off 10,000 employees and consolidated leases. 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 overlap.
As we enter 2025, Microsoft faces a more difficult relationship with artificial intelligence startup OpenAI, which the company has backed with over $13 billion. The partnership helped Microsoft's market capitalization rise to over $3 trillion last year.
Over the summer, Microsoft added OpenAI to its list of competitors. Microsoft CEO Satya Nadella used the phrase “collaborative tension” when discussing the relationship with investors Brad Gerstner and Bill Gurley in a podcast released last month.
Meanwhile, the Microsoft 365 Copilot assistant, based on OpenAI technology, has not yet become widespread in business. Analysts at UBS said in a note last month that after Microsoft's Ignite conference, they felt the rollout of Copilot had been “somewhat slow/disappointing.”
Microsoft is still touting its growth opportunities. Chief Financial Officer Amy Hood said in October that revenue growth from Microsoft's Azure cloud would accelerate in the first half of this year due to greater capacity in its AI infrastructure.
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