Microsoft is cutting a small percentage of jobs across departments, based on performance, the company confirmed to CNBC on Wednesday.<\/p>\n
\u201cAt Microsoft we focus on high-performance talent,\u201d a Microsoft spokesperson said in an email to CNBC on Wednesday. \u201cWe are always working on helping people learn and grow. When people are not performing, we take the appropriate action.\u201d<\/p>\n
Business Insider reported on the plans late Tuesday.<\/p>\n
The job cuts will affect less than 1% of employees, said a person familiar with the matter who asked not to be named in order to discuss private information.<\/p>\n
Microsoft had 228,000 employees at the end of June. While the company\u2019s net income margin of nearly 38% is close to its highest since the early 2000s, Microsoft\u2019s stock underperformed its peers last year, rising 12% while the Nasdaq gained 29%.<\/p>\n
Microsoft\u2019s latest cuts are slim compared with recent downsizing efforts.<\/p>\n
In early 2023, the company laid off 10,000 employees and consolidated leases. In January 2024, three months after completing the $75.4 billion Activision Blizzard acquisition, Microsoft\u2019s gaming unit shed 1,900 jobs to reduce overlap.<\/p>\n
As 2025 begins, Microsoft faces a more tenuous relationship with artificial intelligence startup OpenAI, which the company has backed to the tune of more than $13 billion. The partnership helped propel Microsoft\u2019s market cap past $3 trillion last year.<\/p>\n
Over the summer, Microsoft added OpenAI to its list of competitors. Microsoft CEO Satya Nadella used the phrase \u201ccooperation tension\u201d while discussing the relationship with investors Brad Gerstner and Bill Gurley on a podcast released last month.<\/p>\n
Meanwhile, the Microsoft 365 Copilot assistant, which draws on OpenAI technology, has yet to become pervasive in business. Analysts at UBS said in a note last month that they came away from Microsoft\u2019s Ignite conference with the impression that Copilot rollouts \u201chave been a bit slow\/underwhelming.\u201d<\/p>\n
Microsoft is still touting its growth opportunities. Finance chief Amy Hood said in October that revenue growth from Microsoft\u2019s Azure cloud will speed up in the first half of this year because of greater AI infrastructure capacity.<\/p>\n<\/p>\n
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