A sign on a Microsoft building in Los Angeles, Calif., on Nov. 7, 2017.Lucy Nicholson/Reuters
Microsoft Corp MSFT-Q on Wednesday said it would eliminate 10,000 jobs and take a $1.2-billion charge, as its cloud-computing customers reassess their spending and the company braces for potential recession.
The layoff, far larger than cuts by Microsoft last year, pile on to tens of thousands of job cuts across the technology sector that’s long past its strong growth during the pandemic.
Its shares fell about 1 per cent.
The news comes even as the software maker is set to ramp up spending in generative artificial intelligence that is the new bright spot for the industry.
Just this week, its chief executive touted AI to world leaders gathered in Davos, Switzerland, claiming the technology would transform its products and touch people around the globe. Microsoft has looked at adding to its $1-billion stake in OpenAI, the startup behind the Silicon Valley chatbot sensation known as ChatGPT.
In a note to employees, CEO Satya Nadella attempted to address the divergent realities.
Customers wanted to “optimize their digital spend to do more with less” and “exercise caution as some parts of the world are in a recession and other parts are anticipating one,” he said. “At the same time, the next major wave of computing is being born with advances in AI.”
Nadella said the layoffs, affecting less than 5 per cent of Microsoft’s work force, would conclude by the end of March, with notifications beginning Wednesday. However, Microsoft would keep hiring in “strategic areas,” he said.
The Jan. 18 timing corresponds with the date its retail and cloud-computing rival Amazon.com Inc has said more employees will be notified in its own 18,000-person layoffs.
The cuts reflect broader belt-tightening in the technology sector. The CEO of another company serving enterprises, Palantir Technologies Inc, this week told Reuters that reducing cloud spending was a top-ten priority of his customers.
More than 150,000 tech-company workers faced job cuts in 2022, according to tracking site Layoffs.fyi. Among them were 11,000 at Facebook’s parent Meta Platforms Inc, representing the breadth of work force reductions stretching beyond enterprise IT to ad-based business and the consumer internet.
Microsoft said it would take a billion-dollar charge from severance costs among other changes. U.S.-eligible staff, for instance, will get health care coverage and stock vesting for six months.
The charge also regards adjustments to its hardware lineup and lease consolidation to build higher-density workspaces, Nadella said. Microsoft declined to detail the hardware changes or say if it would stop developing any product line.
The Redmond, Washington-based company has grappled with a slump in the personal-computer market after a pandemic boom fizzled out, leaving little demand for its Windows software and accompanying products.
In total, the charge, taking place in Microsoft’s second fiscal quarter this year, represents a negative impact of 12 cents per share of profit, the company said.
Wedbush Securities analyst Dan Ives said, “This is a rip the band-aid off moment to preserve margins and cut costs in a softer macro.”
Ascendant in recent years from an explosion in corporate demand to host data online and handle computing in the so-called cloud, Microsoft has taken a different tone in recent months.
In its first fiscal quarter of 2023, cloud growth dropped to 35 per cent, and the company projected the figure to drop again. In July last year, it said a small number of roles had been eliminated.
Still, Nadella sought to assure employees on the future. Generative AI, as reflected by OpenAI’s ChatGPT that Microsoft will soon market through its cloud service, is pointing the road ahead.
“We are allocating both our capital and talent to areas of secular growth and long-term competitiveness for the company, he said. “We will emerge stronger.”
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
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