9 ms·

11,000 people - let's say an average loaded cost of $250k/yr. That's... ~$3b/yr these folks cost MSFT. Granted, it's per year, but ... keeping these people on

11,000 people - let's say an average loaded cost of $250k/yr. That's... ~$3b/yr these folks cost MSFT. Granted, it's per year, but ... keeping these people on for another 3 years would cost ~$10b. MSFT currently have $100b cash on hand. It's gotta be a little... frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me. That said, I don't know what severance packages people are being offered. That might help soften the blow for some folks. EDIT: re one reply about people earning $250k. I indicated 'loaded cost' - health insurance, likely some cost of options/stock, retirement matching, FICA and more. I possibly could have removed 'average'. I suspect many of the folks being cut have on paper salaries (well?) below $200k. Is the 11k number global or US only? Round the number down to $200k. It's closed to $2.2b/year then.

INeedMoreRam 4y ago
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qeternity 4y ago
Why would they spend any amount much less $3b or $10b to keep people they don’t need/want?
- bink 4y ago
  Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent and require much more than just laying off the unneeded workers. It would suggest that large reforms are needed in planning and hiring. But these days it's just dismissed as an "oops!".
  - qeternity 4y ago
    They clearly did need/want them at some point. And then things change. “When the facts change, I change my mind. What do you do?”
  - ProAm 4y ago
    > Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping. Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending. There are tons of people at these companies that can be let go.
  - onlyrealcuzzo 4y ago
    They wanted 11,000 extra heads when the market was rewarding growth. Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore. It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.
    - dcolkitt 4y ago
      MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them.
      - quickthrowman 4y ago
        If the stock isn’t moving, perhaps the news is already priced in.
        bmitc 4y ago
        So either insider trading or a lot of people guessing they’d do a big layoff at some point? Microsoft stock has been incredibly volatile though in the past year.
      - onlyrealcuzzo 4y ago
        Hard to say if the market was expecting layoffs.
      - Closi 4y ago
        > MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them. It's always hard to distinguish signal vs noise in stocks, but it has gone up 0.5% in 24 hours, which is a $8bn raise on the market cap. Cutting $3bn in wages is never going to radically change the market cap of a $1.7T company (you hope!).
  - convolvatron 4y ago
    no hiring process hits 100%. a healthy company deals with that reality incrementally. since many companies have adopted a policy of just generally not firing anyone for performance reasons, they just accrete these people, and when the opportunity arises (i.e. merger), they vent them en masse. I guess its easier to deal with the emotional/morale issues? probably legal too.
    - PreachSoup 4y ago
      > many companies have adopted a policy of just generally not firing anyone for performance reasons Not sure if that's true. For example, out of FANNG afaik only G would be least likely to fire ppl, they gave very generous chance to employees to improve and would only do 'piping' as the last option. But all the others have various forms of stack ranking and aggressive piping mechanism. I would assume many other companies do the same
  - tensor 4y ago
    Or, it means that they didn't forsee the economy going down to the extent it has. Corporate finances work like any large investment company. How much cash do you have on hand, how much is it earning per year, what is your revenue. If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost. There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.
    - KerrAvon 4y ago
      There's no recession, though. There may be one this year, but it didn't exist before all of these layoffs. It may not be a conspiracy, but it seems questionable to believe these companies are not willing a recession into existence through, charitably, pessimism.
      - s1artibartfast 4y ago
        I think it is less pessimism and more realism. The fed clearly indicated that it will raise rates until the market cools
        qwytw 4y ago
        As far as the Fed is concerned inflation, unemployment & GDP growth are all definitely higher priorities than the stock market.
        s1artibartfast 4y ago
        I agree. I didn't mean to imply I was taking about stocks. If the fed is shrinking economic investment until employment and inflation goes down, companies are preparing for slow growth.
      - simonh 4y ago
        The US economy shrank in the first 2 quarters of 2022, and is already forecast to shrink in the first 3 quarters of 2023. Whether it’s in recession or not is a technical issue for economists, but the reality for many companies is that they face a lot of challenges at the moment. In tech particularly there was a boom as businesses moved online during the pandemic that’s shrivelled away with increasing interest rates and inflation.
  - opportune 4y ago
    For one, in many many companies layoffs start in HR/hiring themselves. If MS needed to hire a ton of people in 2020-2022 it’s not at all a sign of incompetence if they hired a lot of recruiters/other HR folks in that time to handle it, and then spin it down when they aren’t as busy hiring. The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it. For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing. Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence
  - smeagull 4y ago
    A company that can't figure out what do with employees is just as much a warning sign. It's a bad signal that Microsoft can't think of any development worth doing.
    - pjmlp 4y ago
      As customer of their tooling I can think of lots of stuff, but yeah management apparently not.
  - deleted 4y ago
    [deleted]
  - jonas21 4y ago
    > Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Sure, but 2020 and 2021 were extremely abnormal. The pandemic triggered a huge shift toward remote work and online activity, which resulted in revenue growth for MSFT, and it was hard to predict the extent to which that would continue after things returned to normal.
  - throwaway4aday 4y ago
    There's nothing indicating that they hired 11,000 people they didn't need. Many of the people being cut have probably been there for a while but may no longer be needed. The article mentions HR staff being laid off which makes sense since the hiring boom in tech has vanished. I don't think you can draw any conclusions about bad management or mistakes from this, the economy and the tech sector are in a slump with practically every large employer trimming fat. This is just business as usual.
  - jayd16 4y ago
    "Management should plan ahead." *Microsoft lays off 11k in lead up to recession "No, not like that." I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important. We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'
  - stocknoob 4y ago
    You're thinking at a corporate efficiency level, which is why shareholders want layoffs. To an individual manager, their pay is generally proportional to the number of reports, so the incentives are for them to hire.
- SilverBirch 4y ago
  The point is that yesterday, they did want/need these people. To make a broader point, when money was cheap all the tech companies expanded to use cheap money to make bets that would grow their revenue. Some of these were speculative, some of these were ill thought out. In the same way that some companies started stupid projects during the cheap money era (meta, I'm looking at you), there will be companies that cut good projects now that the markets are demanding efficiency. The ideal company doesn't start doing stupid stuff during the cheap money era, and continue to invest when rates go up, safe in the knowledge they're confident that their bets will pay off. The problem is CEOs are following the market, rather than making real decisions for themselves, which kind of makes you wonder... weren't they meant to be getting paid 399x the wage of the average employee because they're the best and the brightest, not just following the crowd. But they aren't the best and brightest and they are just following the crowd - which is why they're going to fire a load of people, because we pay them because the buck stops with them. And by them, I mean them firing us.
  - Apocryphon 4y ago
    The buck stops with them because they keep on raking in the dollars, unlike the people they fire.
- simplotek 4y ago
  > Why would they spend any amount much less $3b or $10b to keep people they don’t need/want? I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market. However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community. It's deplorable how a company can toy with someone's life like that just because some exec feels like it.
  - applejacks 4y ago
    Is it neoliberalism specifically, or even just generally living in a capitalist society? (Which hey, I'm happy enough to live in a capitalist society, it has been good to me, but I definitely notice myself evaluating nearly everything through a financial or transactional lens).
    - burkaman 4y ago
      I think it's very easy to live in a capitalist society and still treat people as human beings rather than financial instruments, but if you live like that you probably will not become CEO of Microsoft.
    - ClumsyPilot 4y ago
      Its a tragedy of public education that people do not realise that there are different kinds of capitalism. After all, slave trade was capitalism too. We just went through a massive transition from Kenzian to Neoliberal system, and nobody realised. The underperformance of Neoliberal system compared to its predessesor should be the biggest discussion point in all news. Noone has even heard of shumpeterian theory.
throwawaysleep 4y ago
It boggles my mind that people will work hard for an employer. You care about you less than a used napkin.
- spicymaki 4y ago
  I work hard for myself not some employment ideal.
- foogazi 4y ago
  We don’t do it expecting love in return - we get a paycheck every two weeks
  - throwawaysleep 4y ago
    I get my paycheque for showing up. For dedicated work rather than mediocrity, I need extra.
    - s1artibartfast 4y ago
      so what seems to be the problem?
    - kube-system 4y ago
      You can get people to "show up" for far less than MSFT salaries.
    - deleted 4y ago
      [deleted]
    - citrus1330 4y ago
      It doesn't cost you anything to do your best work
      - serf 4y ago
        that's absolutely un-true in nearly every field, even CS ones. I don't even get the premise. Your best effort doesn't require more .... effort ? What kind of work is it that you do? I'd love to join. If sitting around idly at low-paying jobs watching paint dry wasn't an easier way to achieve a paycheck than the hard work that the employer would prefer you to do then it wouldn't be the world's most common trope.
jesuscript 4y ago
It makes me wonder if they ever allocated money on a as-needed basis. Are they hiring across the board the way they are laying off across the board? Because then their hiring practice makes about as much sense as their firing practice. They must be looking at the recruitment cycle as a cyclical process.
98codes 4y ago
The linked article gives no more information than "Sky news reported this, citing sources." Microsoft employs a wide variety of people, not just developers, and a lot of those jobs aren't making nearly as much as $250k/yr, nor are they so easily rehired into a job somewhere else.
- mgkimsal 4y ago
  I added an edit to round down. Again, I used $250k as a loaded cost - benefits, stock options, IRA matching, etc. Someone on $125k year might still 'cost' an extra $40k, and ... the $250k was possibly on the high side - round down to... $200k, and the argument is now... $2b/year instead of $3b. And yeah, many of these folks may have a harder time finding an equivalent paying engagement (perhaps you'll have to move? hard on people with families, etc).
- tootie 4y ago
  And not just in the US.
chefandy 4y ago
Unless they're laying off 11,000 developers and managers the loaded average is probably even less.
pyrrhotech 4y ago
It's silly to mention the cash on the balance sheet without also mentioning the debt of $77B. In reality, the net cash position is on the order of magnitude of $30B which puts a much tighter perspective on the impact of this cut. 40% of all public companies created since market inception in 1871 have gone bankrupt including many of the bluest of the blue chips. Complacent thinking like this is often the reason. Additionally, if you've ever worked at a large company, you can see first hand at how much bloat there is.
- chrisco255 4y ago
  I would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame.
  - JumpCrisscross 4y ago
    > would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame Bankruptcy is a symptom of leverage. Companies more and more fail by being acquired into oblivion. (It's also common for a dying industry to consolidate until its last gasp.)
  - rileymat2 4y ago
    There are other exits besides bankruptcy, I think a lot of companies kind of whimper into near bankruptcy and then sell to others or just cease operation without bankruptcy, would need to get actual data, but that is my speculation.
  - RC_ITR 4y ago
    Acquisitions mask a lot of it. Its why almost no YC companies have “gone bankrupt,” someone one will usually pay a nominal amount “for a team” and founders are happy for the soft landing.
- hirsin 4y ago
  That's fantastic debt though, at presumably low interest rates. A dollar in my pocket today is worth way more than a dollar in debt at 3.0% interest or less. You can't subtract debt from cash on hand and get a usable value, they're different types.
KallDrexx 4y ago
> MSFT currently have $100b cash on hand. Fwiw, unless cash on hand already accounts for it (I don't think it does), then $70B of that is tied up in the Activision acquisition. Thus we really only have $30B cash on hand, which in a higher than previous interest rate environment is probably not great (though afaict Apple has $48B). Likewise, our cash on hand has been drastically dwindling the last few years, making the $30B total seem a bit more precarious. I have suspicions that the Activision acquisition is a huge part of the hiring freeze at Microsoft and the source of a lot of budget concerns and constraints. It's pretty frustrating watching all the freezes seemingly because of this one acquisition (as an employee without any inside knowledge about this).
- mgkimsal 4y ago
  I had seen someplace else that there's... $107b as of last quarter, but it was down 17% from year before same quarter, so yeah, it's draining some. But are they really putting $70b down in cash for Activision?
  - Kranar 4y ago
    > But are they really putting $70b down in cash for Activision? Yes it's all cash. https://news.microsoft.com/2022/01/18/microsoft-to-acquire-activision-blizzard-to-bring-the-joy-and-community-of-gaming-to-everyone-across-every-device/ https://news.microsoft.com/2022/01/18/microsoft-to-acquire-a...
- KptMarchewa 4y ago
  I really, really doubt that acquisition is 100% cash.
  - CamelCaseName 4y ago
    It is all cash. > As announced on January 18, 2022, Microsoft plans to acquire Activision Blizzard for $95.00 per share in an all-cash transaction. https://www.businesswire.com/news/home/20230111005882/en/Activision-Blizzard-to-Release-Fourth-Quarter-2022-Financial-Results-on-February-6-2023 https://www.businesswire.com/news/home/20230111005882/en/Act...
flashgordon 4y ago
You are also forgetting these people arent sitting on their asses! On average they are at least making the company that much in revenue no? Being unable to deploy them to good use is truly a leadership incompetence!
- 0x5345414e 4y ago
  In aggregate, employees make a company money. That much is trivially true. At the individual level, one can be a net gain, net loss, or breakeven. I often wonder how skewed this distribution is at some companies. Ideally you trim the ones that are a net loss and thus on average aren't making the company money. Whether or not it's obvious who those people are isn't known to me. Anyway, I don't think it's a good assumption that the people being laid off are making the company money on average.
asah 4y ago
It's worth noting that many companies have cash hordes outside the US but need to make payroll inside the US. https://www.google.com/search?q=microsoft+repatriated+cash https://www.google.com/search?q=microsoft+repatriated+cash
deltree7 4y ago
I hope you keep your Uber drivers, Landscapers and Cleaning Ladies on retainers because you have so much cash in your brokerage/bank account
- throwaway29812 4y ago
  This is..not a bad idea? I know several people that kept paying their cleaning people during COVID despite them not being able to come, because they were remote workers and could easily afford it.
  - trgn 4y ago
    It's called noblesse oblige. People with means in their daily lives constantly make financially unsound decisions out of a sense of duty and responsibility. That microsoft is cutthroat here, sure, it is the nature of transactional corporate relations, but it would be a sad, ugly world if individuals internalized this same dehumanizing ethos in their personal dealings.
  - spookthesunset 4y ago
    I paid our cleaners during the first months of covid despite them not coming over... we've been using the same few people for almost a decade now. All the restrictions our governments created really fucked over people like them.
- mgkimsal 4y ago
  I don't uber/lyft, and I don't have cleaning staff. I do keep the lawn company coming, without too much respect to the amount of savings I have. There was a time when I didn't, but... if keeping these extra services amounts to less than a single percent of my cash on hand, I'll likely keep them going.
- hyperhopper 4y ago
  My roommate and I literally kept our maid on retainer during COVID when she could not come.
obert 4y ago
You can double those numbers if you consider all additional costs.
twblalock 4y ago
Companies that think that way wouldn’t get to the point of having that kind of cash. Furthermore, efficiency only increases in importance as companies grow.
__alexs 4y ago
They also want to spend $68b on Activision which might put a bit of a dent in that cash hoard.
yieldcrv 4y ago
> frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me. nobody is entitled to be an employee, the purpose of corporations isn't to print employment numbers, these observations you made should be unrelated
- skinnymuch 4y ago
  Capitalism is a failure. Everyone should be entitled to money.
dcolkitt 4y ago
Also pretty disconcerting that they're doing this at the same time that they're pumping billions into OpenAI (a company with near zero revenue) at a $30 billion valuation.
heleninboodler 4y ago
Re: the "loaded cost", back when I worked for MSFT in the early 2000's, the rule of thumb for management was $250k per person total cost. This is when $125k was considered a pretty good SDE salary. So I'd double your $3b.
- thr0w__4w4y 4y ago
  Yes exactly. There is much more than just "benefits". Cost of office space, computer equipment, office supplies, electricity, janitorial costs, heating, security, servers, IT overhead, etc. When you take ALL these costs and spread them over the company, the loaded cost of an employee is not "mostly" salary.
steve76 4y ago
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maestroia 4y ago
Let's say you're within the ballpark. A three year savings of $10B would be equal to their stated investment into OpenAI. Assume there is a global slowdown, and a corresponding decline in revenues; layoffs may be the way they've decided to free up cash flow to pay for the investment.
UncleOxidant 4y ago
MSFT seems to be willing to invest $10B in OpenAI. It's not clear how they'll make that money back as OpenAI hasn't done much to monetize things like chatGPT.

INeedMoreRam 4y ago

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qeternity 4y ago

Why would they spend any amount much less $3b or $10b to keep people they don’t need/want?

bink 4y ago
Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent and require much more than just laying off the unneeded workers. It would suggest that large reforms are needed in planning and hiring. But these days it's just dismissed as an "oops!".
- qeternity 4y ago
  They clearly did need/want them at some point. And then things change. “When the facts change, I change my mind. What do you do?”
- ProAm 4y ago
  > Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Not really, Big Tech was in an 'arms' race the last decade where they felt if they did not hire people the competition would and they would be worse off in the long run. They all did this. Hence why everyone is trimming the fat as soon as the bubble showed an inkling of popping. Everyone over hired, over paid, and didn't innovate with it enough to make up for the spending. There are tons of people at these companies that can be let go.
- onlyrealcuzzo 4y ago
  They wanted 11,000 extra heads when the market was rewarding growth. Now that the market is rewarding bottom lines - they don't want 11,000 extra heads anymore. It's easy to "blame the Fed" for the market rewarding the bottom line. But we forget that the reason the market was so crazily rewarding growth 2 years ago was also... because of the Fed.
  - dcolkitt 4y ago
    MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them.
    - quickthrowman 4y ago
      If the stock isn’t moving, perhaps the news is already priced in.
      - bmitc 4y ago
        So either insider trading or a lot of people guessing they’d do a big layoff at some point? Microsoft stock has been incredibly volatile though in the past year.
    - onlyrealcuzzo 4y ago
      Hard to say if the market was expecting layoffs.
    - Closi 4y ago
      > MSFT stock is barely moved on the announcement. Doesn't necessarily seem like the market is rewarding them. It's always hard to distinguish signal vs noise in stocks, but it has gone up 0.5% in 24 hours, which is a $8bn raise on the market cap. Cutting $3bn in wages is never going to radically change the market cap of a $1.7T company (you hope!).
- convolvatron 4y ago
  no hiring process hits 100%. a healthy company deals with that reality incrementally. since many companies have adopted a policy of just generally not firing anyone for performance reasons, they just accrete these people, and when the opportunity arises (i.e. merger), they vent them en masse. I guess its easier to deal with the emotional/morale issues? probably legal too.
  - PreachSoup 4y ago
    > many companies have adopted a policy of just generally not firing anyone for performance reasons Not sure if that's true. For example, out of FANNG afaik only G would be least likely to fire ppl, they gave very generous chance to employees to improve and would only do 'piping' as the last option. But all the others have various forms of stack ranking and aggressive piping mechanism. I would assume many other companies do the same
- tensor 4y ago
  Or, it means that they didn't forsee the economy going down to the extent it has. Corporate finances work like any large investment company. How much cash do you have on hand, how much is it earning per year, what is your revenue. If you suddenly are getting 10% less from investments and possibly less from revenue due to a severe economic downturn, then you need to save 10% in costs somewhere, and for tech companies people are always the biggest cost. There is no conspiracy here. You may wish that these large companies would have seen a recession coming, but that's not a very realistic wish.
  - KerrAvon 4y ago
    There's no recession, though. There may be one this year, but it didn't exist before all of these layoffs. It may not be a conspiracy, but it seems questionable to believe these companies are not willing a recession into existence through, charitably, pessimism.
    - s1artibartfast 4y ago
      I think it is less pessimism and more realism. The fed clearly indicated that it will raise rates until the market cools
      - qwytw 4y ago
        As far as the Fed is concerned inflation, unemployment & GDP growth are all definitely higher priorities than the stock market.
        s1artibartfast 4y ago
        I agree. I didn't mean to imply I was taking about stocks. If the fed is shrinking economic investment until employment and inflation goes down, companies are preparing for slow growth.
    - simonh 4y ago
      The US economy shrank in the first 2 quarters of 2022, and is already forecast to shrink in the first 3 quarters of 2023. Whether it’s in recession or not is a technical issue for economists, but the reality for many companies is that they face a lot of challenges at the moment. In tech particularly there was a boom as businesses moved online during the pandemic that’s shrivelled away with increasing interest rates and inflation.
- opportune 4y ago
  For one, in many many companies layoffs start in HR/hiring themselves. If MS needed to hire a ton of people in 2020-2022 it’s not at all a sign of incompetence if they hired a lot of recruiters/other HR folks in that time to handle it, and then spin it down when they aren’t as busy hiring. The same goes for marketing. If you are going to reduce your marketing spend you don’t need as many FTEs to work on it. For engineering, MS is a lot more old school than some other tech companies. Internal transfers basically require re-interviewing, and a lot of people don’t have many transferable skills. MS could be better off (and employees even better off) if they directly laid off e.g. engineers working on Windows LTS rather than trying to find them roles in Bing. Not saying layoffs are ever good, and the details of this one remain to be seen, but I don’t think a 5% layoff signals incompetence
- smeagull 4y ago
  A company that can't figure out what do with employees is just as much a warning sign. It's a bad signal that Microsoft can't think of any development worth doing.
  - pjmlp 4y ago
    As customer of their tooling I can think of lots of stuff, but yeah management apparently not.
- deleted 4y ago
  [deleted]
- jonas21 4y ago
  > Normally, hiring 11,000 people you "didn't need" would be a warning sign that management was incompetent Sure, but 2020 and 2021 were extremely abnormal. The pandemic triggered a huge shift toward remote work and online activity, which resulted in revenue growth for MSFT, and it was hard to predict the extent to which that would continue after things returned to normal.
- throwaway4aday 4y ago
  There's nothing indicating that they hired 11,000 people they didn't need. Many of the people being cut have probably been there for a while but may no longer be needed. The article mentions HR staff being laid off which makes sense since the hiring boom in tech has vanished. I don't think you can draw any conclusions about bad management or mistakes from this, the economy and the tech sector are in a slump with practically every large employer trimming fat. This is just business as usual.
- jayd16 4y ago
  "Management should plan ahead." *Microsoft lays off 11k in lead up to recession "No, not like that." I don't think there's any grand scheme to screw anyone over here. Growth was important and now the balance sheet is more important. We could always start talking about tech unions and guaranteed severance packages and other employee protections but it seems silly to just brood about 'the management.'
- stocknoob 4y ago
  You're thinking at a corporate efficiency level, which is why shareholders want layoffs. To an individual manager, their pay is generally proportional to the number of reports, so the incentives are for them to hire.
SilverBirch 4y ago
The point is that yesterday, they did want/need these people. To make a broader point, when money was cheap all the tech companies expanded to use cheap money to make bets that would grow their revenue. Some of these were speculative, some of these were ill thought out. In the same way that some companies started stupid projects during the cheap money era (meta, I'm looking at you), there will be companies that cut good projects now that the markets are demanding efficiency. The ideal company doesn't start doing stupid stuff during the cheap money era, and continue to invest when rates go up, safe in the knowledge they're confident that their bets will pay off. The problem is CEOs are following the market, rather than making real decisions for themselves, which kind of makes you wonder... weren't they meant to be getting paid 399x the wage of the average employee because they're the best and the brightest, not just following the crowd. But they aren't the best and brightest and they are just following the crowd - which is why they're going to fire a load of people, because we pay them because the buck stops with them. And by them, I mean them firing us.
- Apocryphon 4y ago
  The buck stops with them because they keep on raking in the dollars, unlike the people they fire.
simplotek 4y ago
> Why would they spend any amount much less $3b or $10b to keep people they don’t need/want? I understand that HN is a US-centric forum, where neoliberalism dictates the baseline and the interpretation of all things in life is reduced to a simplistic transaction in a theoretical free market. However, society is comprised of people with family and a personal life and hopes and dreams and aspirations. Hiring someone has a profound impact on their life, and firing them moreso. There's the income aspect, but also the impact it has on where a person can live and consequently all roots their family have in a community. Hiring a person entails a tremendous social responsibility, and moreso firing them. Microsoft has a hefty amount of immigrants from all corners of the world, and some who have visas that limit the odds they can stay even in the country, let alone their community. It's deplorable how a company can toy with someone's life like that just because some exec feels like it.
- applejacks 4y ago
  Is it neoliberalism specifically, or even just generally living in a capitalist society? (Which hey, I'm happy enough to live in a capitalist society, it has been good to me, but I definitely notice myself evaluating nearly everything through a financial or transactional lens).
  - burkaman 4y ago
    I think it's very easy to live in a capitalist society and still treat people as human beings rather than financial instruments, but if you live like that you probably will not become CEO of Microsoft.
  - ClumsyPilot 4y ago
    Its a tragedy of public education that people do not realise that there are different kinds of capitalism. After all, slave trade was capitalism too. We just went through a massive transition from Kenzian to Neoliberal system, and nobody realised. The underperformance of Neoliberal system compared to its predessesor should be the biggest discussion point in all news. Noone has even heard of shumpeterian theory.

throwawaysleep 4y ago

It boggles my mind that people will work hard for an employer. You care about you less than a used napkin.

spicymaki 4y ago
I work hard for myself not some employment ideal.
foogazi 4y ago
We don’t do it expecting love in return - we get a paycheck every two weeks
- throwawaysleep 4y ago
  I get my paycheque for showing up. For dedicated work rather than mediocrity, I need extra.
  - s1artibartfast 4y ago
    so what seems to be the problem?
  - kube-system 4y ago
    You can get people to "show up" for far less than MSFT salaries.
  - deleted 4y ago
    [deleted]
  - citrus1330 4y ago
    It doesn't cost you anything to do your best work
    - serf 4y ago
      that's absolutely un-true in nearly every field, even CS ones. I don't even get the premise. Your best effort doesn't require more .... effort ? What kind of work is it that you do? I'd love to join. If sitting around idly at low-paying jobs watching paint dry wasn't an easier way to achieve a paycheck than the hard work that the employer would prefer you to do then it wouldn't be the world's most common trope.

jesuscript 4y ago

It makes me wonder if they ever allocated money on a as-needed basis. Are they hiring across the board the way they are laying off across the board? Because then their hiring practice makes about as much sense as their firing practice. They must be looking at the recruitment cycle as a cyclical process.

98codes 4y ago

The linked article gives no more information than "Sky news reported this, citing sources." Microsoft employs a wide variety of people, not just developers, and a lot of those jobs aren't making nearly as much as $250k/yr, nor are they so easily rehired into a job somewhere else.

mgkimsal 4y ago
I added an edit to round down. Again, I used $250k as a loaded cost - benefits, stock options, IRA matching, etc. Someone on $125k year might still 'cost' an extra $40k, and ... the $250k was possibly on the high side - round down to... $200k, and the argument is now... $2b/year instead of $3b. And yeah, many of these folks may have a harder time finding an equivalent paying engagement (perhaps you'll have to move? hard on people with families, etc).
tootie 4y ago
And not just in the US.

chefandy 4y ago

Unless they're laying off 11,000 developers and managers the loaded average is probably even less.

pyrrhotech 4y ago

It's silly to mention the cash on the balance sheet without also mentioning the debt of $77B. In reality, the net cash position is on the order of magnitude of $30B which puts a much tighter perspective on the impact of this cut. 40% of all public companies created since market inception in 1871 have gone bankrupt including many of the bluest of the blue chips. Complacent thinking like this is often the reason. Additionally, if you've ever worked at a large company, you can see first hand at how much bloat there is.

chrisco255 4y ago
I would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame.
- JumpCrisscross 4y ago
  > would think the figure of public companies gone bankrupt to be much much higher over that long of a time frame Bankruptcy is a symptom of leverage. Companies more and more fail by being acquired into oblivion. (It's also common for a dying industry to consolidate until its last gasp.)
- rileymat2 4y ago
  There are other exits besides bankruptcy, I think a lot of companies kind of whimper into near bankruptcy and then sell to others or just cease operation without bankruptcy, would need to get actual data, but that is my speculation.
- RC_ITR 4y ago
  Acquisitions mask a lot of it. Its why almost no YC companies have “gone bankrupt,” someone one will usually pay a nominal amount “for a team” and founders are happy for the soft landing.
hirsin 4y ago
That's fantastic debt though, at presumably low interest rates. A dollar in my pocket today is worth way more than a dollar in debt at 3.0% interest or less. You can't subtract debt from cash on hand and get a usable value, they're different types.

KallDrexx 4y ago

> MSFT currently have $100b cash on hand. Fwiw, unless cash on hand already accounts for it (I don't think it does), then $70B of that is tied up in the Activision acquisition. Thus we really only have $30B cash on hand, which in a higher than previous interest rate environment is probably not great (though afaict Apple has $48B). Likewise, our cash on hand has been drastically dwindling the last few years, making the $30B total seem a bit more precarious. I have suspicions that the Activision acquisition is a huge part of the hiring freeze at Microsoft and the source of a lot of budget concerns and constraints. It's pretty frustrating watching all the freezes seemingly because of this one acquisition (as an employee without any inside knowledge about this).

mgkimsal 4y ago
I had seen someplace else that there's... $107b as of last quarter, but it was down 17% from year before same quarter, so yeah, it's draining some. But are they really putting $70b down in cash for Activision?
- Kranar 4y ago
  > But are they really putting $70b down in cash for Activision? Yes it's all cash. https://news.microsoft.com/2022/01/18/microsoft-to-acquire-activision-blizzard-to-bring-the-joy-and-community-of-gaming-to-everyone-across-every-device/ https://news.microsoft.com/2022/01/18/microsoft-to-acquire-a...
KptMarchewa 4y ago
I really, really doubt that acquisition is 100% cash.
- CamelCaseName 4y ago
  It is all cash. > As announced on January 18, 2022, Microsoft plans to acquire Activision Blizzard for $95.00 per share in an all-cash transaction. https://www.businesswire.com/news/home/20230111005882/en/Activision-Blizzard-to-Release-Fourth-Quarter-2022-Financial-Results-on-February-6-2023 https://www.businesswire.com/news/home/20230111005882/en/Act...

flashgordon 4y ago

You are also forgetting these people arent sitting on their asses! On average they are at least making the company that much in revenue no? Being unable to deploy them to good use is truly a leadership incompetence!

0x5345414e 4y ago
In aggregate, employees make a company money. That much is trivially true. At the individual level, one can be a net gain, net loss, or breakeven. I often wonder how skewed this distribution is at some companies. Ideally you trim the ones that are a net loss and thus on average aren't making the company money. Whether or not it's obvious who those people are isn't known to me. Anyway, I don't think it's a good assumption that the people being laid off are making the company money on average.

asah 4y ago

It's worth noting that many companies have cash hordes outside the US but need to make payroll inside the US. https://www.google.com/search?q=microsoft+repatriated+cash https://www.google.com/search?q=microsoft+repatriated+cash

deltree7 4y ago

I hope you keep your Uber drivers, Landscapers and Cleaning Ladies on retainers because you have so much cash in your brokerage/bank account

throwaway29812 4y ago
This is..not a bad idea? I know several people that kept paying their cleaning people during COVID despite them not being able to come, because they were remote workers and could easily afford it.
- trgn 4y ago
  It's called noblesse oblige. People with means in their daily lives constantly make financially unsound decisions out of a sense of duty and responsibility. That microsoft is cutthroat here, sure, it is the nature of transactional corporate relations, but it would be a sad, ugly world if individuals internalized this same dehumanizing ethos in their personal dealings.
- spookthesunset 4y ago
  I paid our cleaners during the first months of covid despite them not coming over... we've been using the same few people for almost a decade now. All the restrictions our governments created really fucked over people like them.
mgkimsal 4y ago
I don't uber/lyft, and I don't have cleaning staff. I do keep the lawn company coming, without too much respect to the amount of savings I have. There was a time when I didn't, but... if keeping these extra services amounts to less than a single percent of my cash on hand, I'll likely keep them going.
hyperhopper 4y ago
My roommate and I literally kept our maid on retainer during COVID when she could not come.

obert 4y ago

You can double those numbers if you consider all additional costs.

twblalock 4y ago

Companies that think that way wouldn’t get to the point of having that kind of cash. Furthermore, efficiency only increases in importance as companies grow.

__alexs 4y ago

They also want to spend $68b on Activision which might put a bit of a dent in that cash hoard.

yieldcrv 4y ago

> frustrating to get be part of a 5% cut when there's so much free cash sitting around. I know, it's a narrow view of corporate finance, and I don't have the 'big picture', but... still doesn't sit right with me. nobody is entitled to be an employee, the purpose of corporations isn't to print employment numbers, these observations you made should be unrelated

skinnymuch 4y ago
Capitalism is a failure. Everyone should be entitled to money.

dcolkitt 4y ago

Also pretty disconcerting that they're doing this at the same time that they're pumping billions into OpenAI (a company with near zero revenue) at a $30 billion valuation.

heleninboodler 4y ago

Re: the "loaded cost", back when I worked for MSFT in the early 2000's, the rule of thumb for management was $250k per person total cost. This is when $125k was considered a pretty good SDE salary. So I'd double your $3b.

thr0w__4w4y 4y ago
Yes exactly. There is much more than just "benefits". Cost of office space, computer equipment, office supplies, electricity, janitorial costs, heating, security, servers, IT overhead, etc. When you take ALL these costs and spread them over the company, the loaded cost of an employee is not "mostly" salary.

steve76 4y ago

[dead]

maestroia 4y ago

Let's say you're within the ballpark. A three year savings of $10B would be equal to their stated investment into OpenAI. Assume there is a global slowdown, and a corresponding decline in revenues; layoffs may be the way they've decided to free up cash flow to pay for the investment.

UncleOxidant 4y ago

MSFT seems to be willing to invest $10B in OpenAI. It's not clear how they'll make that money back as OpenAI hasn't done much to monetize things like chatGPT.