Microsoft, Google Announce Hundreds Of Job Cuts In Tech Departments Despite Robust Financials

Satya Nadella-led Microsoft Corporation MSFT and Sundar Pichai’s Alphabet Inc. GOOG GOOGL have announced significant layoffs in their respective departments, impacting hundreds of employees.

What Happened: On Monday, Microsoft announced layoffs that can reportedly impact 1,000 employees, including those in the mixed reality department working on HoloLens 2. The Azure for Operators and Mission Engineering departments have also seen significant cuts, reported The Verge.

Microsoft spokesperson Craig Cincotta stated, “Earlier today, we announced a restructuring of Microsoft's Mixed Reality organization. We remain fully committed to the Department of Defense's IVAS program and will continue to deliver cutting-edge technology to support our soldiers.”

“In addition, we will continue to invest in W365 to reach the broader Mixed Reality hardware ecosystem. We will continue to sell HoloLens 2 while supporting existing HoloLens 2 customers and partners,” the spokesperson added.

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Simultaneously, Alphabet is laying off employees from several teams in Google's cloud unit, one of its fastest-growing businesses. 

The company notified employees last week of the cloud cuts, with roles being eliminated in sales, consulting, "go to market" strategy, operations, and engineering. At least 100 positions were cut, reported CNBC, citing internal correspondence.

A Google spokesperson said that the cuts are incremental across teams to better align its go-to-market organization. “As we've shared before, we continue to evolve our business to meet our customers' priorities and the significant opportunity ahead," the spokesperson said.

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Why It Matters: These layoffs come as a surprise, especially considering the strong financial performance of both companies in the first quarter of 2024. 

Microsoft’s third-quarter revenue rose 17% year-over-year to $61.9 billion, surpassing the consensus estimate of $60.804 billion, according to Benzinga Pro. The tech giant posted quarterly earnings of $2.94 per share, beating analyst expectations of $2.82 per share.

Similarly, Alphabet’s first-quarter earnings showed a 15% year-over-year increase in revenue to $80.539 billion, also surpassing analyst estimates. The company announced quarterly earnings of $1.89 per share, exceeding analyst estimates of $1.51 per share.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.