Microsoft stock hits decade high ahead of layoffs

If your stock portfolio of contains Microsoft, today is a good day. Frankly, the past few weeks have been quite good for the company's stock, as it has been climbing rather consistently since Satya Nadella took over the reigns as CEO.

While there is no doubt that Nadella is changing the way the company is operating and is installing a new "challenger mindset," Wall Strett loves layoffs from a profitable company; investors traditionally look at layoffs from a profitable company as a way to streamline operations and reduce unnecessary expenditures. When Microsoft bought Nokia's devices arm, it also obtained more than 25,000 new employees; with that many acquisitions, there are overlapping roles that results in unnecessary overhead for the company.

Nadella hinted at layoffs in his open letter to employees, where he said organization change was needed and that more accountability should be taken by employees. 

How many employees will be laid off is not known, but it is expected that these could be the largest layoffs in the company's history. Some rumors have said up to 10 percent, which would push the number over 10,000, but until Microsoft says what the actual figure will be, this is speculation.

The logical time for Microsoft to announce the layoffs will be at its July 22 earnings call, but expect the company to communicate this information internally to employees before it's made public.

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As bad as it sounds MS has a problem, it's had one for a while now, too many middle managers and VPs of this and that and now with Nokias phone division it's got even more people doing the same jobs. Sure it sucks if you lose your job but it happens, there's no way they can keep these people and in the end it helps the company, not because it saves them money on payroll etc but like the post says, it streamlines the overall operation.

Some people expect the bulk of this to come from the Nokia side but it wouldn't surprise me at all if they're mostly from MS' side actually, and a good chunk of them could be marketing and PR people now that MS has centralized it's marketing team, no need for each division/product from MS to have it's own marketing department. Don't know who thought that was a bright idea, always showed when one part of the company had no idea what the other was doing.

I hope, as crazy as it sounds, that lots of these are also from the layers of middle management that get in the way of divisions working together and also slow down development/advancement of products. There's no reason to have, say 3 or 4 middle guys between the developers and the division boss that have to "ok" something before it happens, which I bet is the case.

Didn't criticize MS, investors...personally find it objectionable that lay offs are cause for optimism, but i understand your logic/explanation. I can't understand anyone that sees this as just numbers and not lives being affected, if not destroyed

neoadorable said,
Hope you encounter a dose of natural selection yourself soon, and some in your family while we're at it, why not


I wouldn't say its a happy moment, or that its great to see anyone unemployed, but this has to happen sometimes. Are we going to condemn MS for letting go those who are now redundant or unnecessary? MS has been getting rid of executives along with lower level employees, so its not like they are reserving these choices for one area.

MS cannot be expected to just employ everyone forever regardless of what they are doing. MS usually takes good care of those they let go, so hopefully anyone affected can move on at their own pace.

Completely agree MS are a very good employer normally, and actually not even criticizing them. It's the fact that the stock went up as a result and that to many people here and elsewhere the loss of jobs is cause for merriment that is making my gorge rise.

neoadorable said,
Completely agree MS are a very good employer normally, and actually not even criticizing them. It's the fact that the stock went up as a result and that to many people here and elsewhere the loss of jobs is cause for merriment that is making my gorge rise.

The fact that the stock goes up shouldn't be a reason to get upset. There is nothing emotional about it.

The stock rise is normal in this case because investors see it as healthy for a huge company to review and change employment levels, especially in MS' case.

Remember, the price went up after the start of MS' reorg, which saw many executives get squeezed out. Prices went up again with Steve Ballmer's retirement since it was a further sign of a MS turn around from the past. Right now MS is absorbing 30k Nokia employees, which obviously includes overlap. Investors would not like to see a company paying for employees that are redundant long term, that just makes the company look unsound financially.

Get upset with those that make light of it sure, but I don't think MS or investors in the stock market deserve criticism on this point.

Never say I like it.
Hate it actually, and the whole system about growth because they have to grow.

But sadly that's how the world is designed to be. Kill each others for your own wealth.

Just another reenactment of the natural selection.
Those who doesn't make the cut die for the betterment of the world (company)

neoadorable said,
Layoff are a reason to be happy and optimistic? As much as i love humanity, sometimes i just think we should end

So its not ok for people to invest more in Microsoft because their employee to earnings ratio is coming more inline with other companies like Apple and Google but its ok to want all of humans to die?

One leads to the other and the conclusion was a "maybe", as in "sometimes". But yes, that's the gist of it. A species where some members cheer the misfortunes of their peers perhaps doesn't deserve to exist.

neoadorable said,
One leads to the other and the conclusion was a "maybe", as in "sometimes". But yes, that's the gist of it. A species where some members cheer the misfortunes of their peers perhaps doesn't deserve to exist.

Do you see the problem with that though? The mocking is wrong, yes. The cheering is wrong, yes. But it pales in wanting them to die. That is far worse than mocking or jeering people. Especially when you want all of a species to die because a few members are mocking them.

Just my thoughts on it. But I do understand the cuts, however, I want everyone who is cut to get some good severance and land on their feet again quickly. My heart goes out to the people affected by this. And its a lot more than the 12k or whatever being cut.

I don't honestly want anyone to die...it's despair and disgust at the mindset. If job losses are cause for shareholder joy, then i don't know what to say anymore, it's just disgusting. I don't think this is a wrong train of thought, as i refer to the species as a whole, not individuals. Anyway, i know what you mean, i still the whole notion is repugnant.

neoadorable said,
I don't honestly want anyone to die...it's despair and disgust at the mindset. If job losses are cause for shareholder joy, then i don't know what to say anymore, it's just disgusting. I don't think this is a wrong train of thought, as i refer to the species as a whole, not individuals. Anyway, i know what you mean, i still the whole notion is repugnant.

That I can definitely understand.

Garnet H. said,

Stocks can go higher than high.

yeah, but I doubt they will hit the $100+ range, there are just too many shares out there

im so ######, I sold my shares a few months ago. And I was gonna buy more during Ballmers reign but he made me nervous so much, that I lost confidence. Is it too late to buy buy buy? I feel like MS will never reach AAPL or GOOG status which pisses me off.

Antoine Prince said,
Is it too late to buy buy buy?

I would say probably not, but I wouldn't risk it. If you kept your stock or to anyone else though I probably wouldn't sell... not yet.

Garnet H. said,
I would say probably not, but I wouldn't risk it. If you kept your stock or to anyone else though I probably wouldn't sell... not yet.
Their dividends are nice. I'm not selling. Going to ride this baby :)

MrHumpty said,
Their dividends are nice. I'm not selling. Going to ride this baby :)

Dividends are always nice. I just got some dividends on Nokia but it turns out I owe Finland $370 in foreign taxes now.

MrHumpty said,
Their dividends are nice. I'm not selling. Going to ride this baby :)
You can always buy it back later when it's low before the day.

When did they pay devidends ?

more profit$, Microsoft should fired more high ranking employees too as they who eat more cost than low ranked employees.

infact, didn't stock market rejoice when Ballmer out?

Since they are doing some flattening of the company, I would expect some of the layoffs to be mid to high level management as well, which are all likely pretty high ranking employee's.

Vester said,
Shame nearly every layoff wont be from management just the low end workers.

There has already been several executives leaving the company and the MS reorg is still leading to some in management getting laid off or leaving.

If they are trying to cut down on redundancy thanks to the Nokia group, then it very well could include some managers.

Stupid shareholders. Lay offs cause good employees to leave and less employees mean less folks earning revenue for the company. It is like all employees == costs

They can always leave before the condition turns worse.
As long as they got the money, all's fine.

Besides, managers believe in that "human potentials have no limit", which means you can always push employee to work 400% (and lay off three other employees to save cost) and still get higher productivity :)

Getting laid off is actually more beneficial due to severance pay provided you have a healthy market and can find a job within a month or two.

sinetheo said,
Stupid shareholders. Lay offs cause good employees to leave and less employees mean less folks earning revenue for the company. It is like all employees == costs

There is always the option that they actually do have too many employees (redundant positions in the company) so doing this won't have a negative effect on production. In fact if these positions truly are redundant then the company will benefit and so will its produce......too many cooks an all that jaz?

Enron said,
Well they're really cutting redundant positions right now and maybe a few underperformers.

I don't think people realize that layoffs happen after mergers... And if the business is to be healthy they have to cut some people. I don't think anyone is happy about it but its a reality.

I had gotten laid off from IBM last year. Looking back and at the actions of the company during that time period makes me absolutely disgusted. I will never work for a large corporation ever again.

TrekRich said,
Nothing like capitalism to make people unemployed.
Nothing like not understanding capitalism to make a comment not appreciating creative destruction.

MrHumpty said,
Nothing like not understanding capitalism to make a comment not appreciating creative destruction.

Hope you lose your job and become destitute soon, i really do

neoadorable said,

Hope you lose your job and become destitute soon, i really do

You really shouldn't wish anyone to lose their job. That could royally screw up someone's life.

TrekRich said,
Nothing like capitalism to make people unemployed.

Technically, capitalism is what powers all businesses, big or small. There would be no employment without it.

Capitalism gets people employed too.

Don't confuse those that abuse the system with the system itself. Crooked companies or sleazy deals are not part of the system, they just represent people that try and 'game' the system.

neoadorable said,
Hope you lose your job and become destitute soon, i really do
I won't, I've risked my own capital and work for myself :) If I lose my job it's due to my own mistakes.

Grinch said,
You really shouldn't wish anyone to lose their job. That could royally screw up someone's life.
Or open new opportunities for them to be more productive in society than their current job. Creative destruction is about reallocating capital (human & physical) to a new role by freeing that capital up to move.

Every one of these people will be able to get new jobs. MS was not obligated to keep them employed forever. If they were not being used fully in their current position why should we want them to stay there?

trooper11 said,
Technically, capitalism is what powers all businesses, big or small. There would be no employment without it.
I'd add that people are their own capital. The idea of "investing in oneself" with education, skills, experience is true. Your own personal capital is very important. Even relationships are your own personal capital. You build your own capital to be able to use it to gain higher profits (salary). If you don't treat yourself right, capital-wise then you'll see losses (reduced pay or layoff). People need to seriously quit trying to hate the system. Participating is much easier... it's just not as fun because you have to realize that you are just a commodity in the economy.