Microsoft CEO Addresses Layoffs Amid AI Investments and Record Profits

Satya Nadella seeks to reassure Microsoft employees in layoffs memo

Tom Warren is a senior editor and author of Notepad, who has been covering all things Microsoft, PC, and tech for over 20 years. Microsoft CEO Satya Nadella didn't send a company-wide memo when the software maker laid off as many as 9,000 employees earlier this month. Now, Nadella is finally addressing what's on many Microsoft employee's minds: layoffs. "I want to speak to what's been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations," says Nadella in a memo to all Microsoft employees today. "These decisions are among the most difficult we have to make. They affect people we've worked alongside, learned from, and shared countless moments with -- our colleagues, teammates, and friends." While Nadella expresses gratitude for affected employees, he doesn't guarantee there won't be more waves of layoffs in the near future, and notes that Microsoft's headcount is "relatively unchanged" despite the cuts: I also want to acknowledge the uncertainty and seeming incongruence of the times we're in. By every objective measure, Microsoft is thriving -- our market performance, strategic positioning, and growth all point up and to the right. We're investing more in CapEx than ever before. Our overall headcount is relatively unchanged, and some of the talent and expertise in our industry and at Microsoft is being recognized and rewarded at levels never seen before. And yet, at the same time, we've undergone layoffs. This is the enigma of success in an industry that has no franchise value. Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before. After addressing the layoffs, Nadella also lays out Microsoft's mission, priorities, and culture. The mission, as you might expect, revolves very much around the potential of AI. He asks more than 200,000 Microsoft employees to "imagine if all 8 billion people could summon a researcher, an analyst, or a coding agent," and how this "could unlock entirely new levels of agility and innovation." Nadella also outlines three key business priorities: security, quality, and AI transformation. Security was made Microsoft's number one priority last year, after a series of attacks and trust waning in Microsoft's security efforts. Now, Nadella says Microsoft is "doubling down on the fundamentals" while also focusing on AI. "Security and quality are non-negotiable. Our infrastructure and services are mission critical for the world, and without them we don't have permission to move forward," says Nadella. On the culture side, there are plenty of concerns from Microsoft employees that the continuous layoffs could create a culture of fear. Nadella now wants employees to keep the "growth mindset" culture in mind while the AI platform shift is reshaping Microsoft's products and business models. "It might feel messy at times, but transformation always is," says Nadella. "Teams are reorganizing. Scopes are expanding. New opportunities are everywhere."

Microsoft CEO feels weighed down by job cuts

Satya Nadella lays out revised mission for Redmond. Spoiler: It involves AI Microsoft CEO Satya Nadella on Thursday told employees in a memo that the company's recent layoffs have been "weighing heavily on me." Thanking terminated employees for their service, Nadella attempted to address the cognitive dissonance that follows from headcount trimming at a time of strong financial performance. In Microsoft's fiscal 2024, which ended June 30 of last year, it reported $245 billion in annual revenue, up 16 percent year-over-year, and over $109 billion in operating income, up 24 percent. Yet this calendar year, the software giant has cut more than 15,000 jobs, including 9,000 in July. "By every objective measure, Microsoft is thriving - our market performance, strategic positioning, and growth all point up and to the right," Nadella said. "We're investing more in CapEx than ever before. Our overall headcount is relatively unchanged, and some of the talent and expertise in our industry and at Microsoft is being recognized and rewarded at levels never seen before. And yet, at the same time, we've undergone layoffs." Nadella continued, "This is the enigma of success in an industry that has no franchise value." We have no idea what Nadella - or perhaps Microsoft Copilot - is trying to say here. Industries don't have "franchise value," which describes estimated revenue from present and future business opportunities, including intangibles like customer loyalty and brand reputation. But companies do. Microsoft, with its thriving Productivity and Business Processes, Intelligent Cloud, and More Personal Computing segments, certainly has franchise value. If Nadella is trying to suggest that layoffs and growing profit go together because Microsoft's business could disappear at any moment, because the company has no franchise value that keeps revenue flowing, that just doesn't make sense. Perhaps it's just an admission that nobody - including Microsoft - has really figured out how to make big money from AI, much less how to value potential future revenue. The enigma here is why Microsoft feels the need to cut staff as it pours money into AI, given that it's not likely to save all that much from job cuts compared to its expected datacenter outlay. At the start of this year, Microsoft said it would spend $80 billion in capex to build out AI infrastructure. That's the equivalent of 533,333 employees - more than twice Microsoft's actual headcount of 228,000 - if expensed at a rate of $150,000 each. ZipRecruiter estimates that the average salary of a Microsoft employee is about $115,000 annually. That's around $150,000 if you add about 30 percent of salary in benefits. So while cutting 15,000 jobs might save $2.25 billion annually based on the above assumptions - excluding severance costs - that's still a very small portion of the funds allotted for Microsoft's AI building spree this year. We note that Nadella, with his $79.1 million annual pay package in 2024, could be exchanged for about 527 employees at the above market rate. Having failed to provide a clear answer about the need for layoffs, Nadella argued that Microsoft must redefine its mission because company co-founder Bill Gates' vision of "a software factory, unconstrained by any single product or category" is no longer enough. Microsoft, Nadella wrote, must be reimagined as "an intelligence engine empowering every person and organization to build whatever they need to achieve." "Just imagine if all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips, not just to get information but use their expertise to get things done that benefit them," Nadella mused. "And consider how organizations, empowered with AI, could unlock entirely new levels of agility and innovation by transforming decision-making, streamlining operations, and enabling every team to achieve more together than ever before." We're just guessing here, but given that 1 in 3 people lack clean drinking water - a popular beverage at datacenters - a few billion among us probably have priorities other than kibitzing with Microsoft Copilot. As for those of us fortunate enough not to worry about such matters, interest in chatbot access probably takes a backseat behind having a job. Microsoft clearly does consider AI to be a priority. In fact, it's one of three that Nadella cites: security, quality, and AI transformation. In terms of security and quality, Microsoft's record speaks for itself. That leaves AI transformation. Nadella may be uncomfortable with layoffs, but they're a convenient counterweight to suppress concerns among investors and financial analysts about lavish AI spending on services that have yet to turn a profit. Microsoft is scheduled to report its fiscal 2025 fourth quarter earnings next Wednesday. ®

Microsoft's Satya Nadella says job cuts have been 'weighing heavily' on him

Microsoft has laid off over 15,000 people so far in 2025. The stress of the belt-tightening has gotten to CEO Satya Nadella. "Before anything else, I want to speak to what's been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations," Nadella wrote in a memo to employees Thursday. After Microsoft's latest labor reductions, investors pushed the stock's closing price above $500 for the first time on July 9. The company announced the layoffs of about 9,000 people a week earlier. Microsoft employed 228,000 people as of June 2024 -- it hasn't provided a new figure that takes into account its layoffs this year. "This is the enigma of success in an industry that has no franchise value," he wrote. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." The cuts at Microsoft are reflective of an overall trend across the tech industry, with over 80,000 positions eliminated to date in 2025, according to one count. Recruit Holdings announced earlier this month that it would lay off 1,300 people from its human resources technology segment that includes the Indeed and Glassdoor websites. The company's CEO pointed to artificial intelligence in a memo, Bloomberg reported. On social media in recent months, some Microsoft employees have become disheartened about the company's cutbacks, given its stature. "I have loved working for this company, still do, but this has done so much damage to that loyalty because it has shown that Microsoft's espoused values do not apply to business decisions at the macro level," a person who lists themselves as a Microsoft directed on LinkedIn posted last week. Microsoft is the world's most valuable public company after Nvidia, whose chips have become a critical piece of the AI arms race. Microsoft's Windows and Office franchises remain dominant, and its Azure cloud services have seen faster growth in recent years as OpenAI and other companies rent out Nvidia graphics cards to run AI models. In the memo, Nadella touched on Microsoft's mission for the past 10 years, which has been to empower every person and every organization on the planet to achieve more, and how the rise of AI is changing it. "We must reimagine our mission for a new era," he wrote. "What does empowerment look like in the era of AI? It's not just about building tools for specific roles or tasks. It's about building tools that empower everyone to create their own tools. That's the shift we are driving -- from a software factory to an intelligence engine empowering every person and organization to build whatever they need to achieve." Microsoft reports fiscal fourth-quarter results on Wednesday.

Microsoft CEO Satya Nadella addresses 'painful' layoffs, discusses ambitious AI plans in company memo

Serving tech enthusiasts for over 25 years. TechSpot means tech analysis and advice you can trust. What just happened? Microsoft is facing one of the most turbulent phases in its history, balancing massive investments in artificial intelligence and infrastructure with significant job cuts, creating a climate of uncertainty within the company. On Thursday morning, CEO Satya Nadella addressed employees in a memo that directly acknowledged the contradictions they are experiencing. "I want to acknowledge the uncertainty and seeming incongruence of the times we're in. By every objective measure, Microsoft is thriving... and yet, at the same time, we've undergone layoffs," Nadella wrote. He described navigating layoffs while reporting strong financial results as the "enigma of success in an industry that has no franchise value," emphasizing the unpredictable nature of technological transformation. The layoffs have been extensive, with more than 15,000 employees let go so far in 2025, including a large round of 9,000 in early July. These moves represent some of the most aggressive workforce reductions the company has implemented in decades. While overall headcount remains relatively flat due to selective hiring, the scale of the cuts has unsettled the workforce and prompted difficult questions about Microsoft's culture and direction. As the company pours resources into building capabilities for the AI age, President Brad Smith pointed to the scale of Microsoft's capital expenditures as a key factor. Smith told GeekWire in a recent interview that around $80 billion has been spent over the past year on data centers, AI chips, and other critical infrastructure to maintain the company's edge in artificial intelligence. "Record capital expenditures... have put pressure on the company to reduce operating costs," Smith said. President Brad Smith said $80 billion in capital spending pressured the company to cut operating costs With the rapid pace of change, Nadella urged employees to focus on Microsoft's core mission, which, he said, must also evolve. He outlined a shift from being a "software factory" to building an "intelligence engine" that empowers everyone - not just technology professionals - to create their own AI-powered tools. Nadella emphasized that the company's continued relevance depends on adapting to new business realities, learning new ways of working, and meeting changing customer needs. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before," he said. Nadella also spoke of the emotional burden that job eliminations have placed on the company, describing them as "among the most difficult we have to make." He expressed gratitude to departing employees for their contributions. Meanwhile, internal and external commentary has raised concerns that the current environment may be eroding the culture of inclusion and empathy Microsoft built in recent years under Nadella's leadership, with some longtime employees worried about a return to more competitive, insecure times. Despite these headwinds, Microsoft continues to invest in its future, ramping up hiring in critical AI-related roles and launching multi-billion-dollar initiatives to help workers adapt to the demands of the AI era. Nadella told employees to expect more details during the upcoming earnings and a future town hall.

In new memo, Microsoft CEO addresses 'enigma' of layoffs amid record profits and AI investments

Microsoft CEO Satya Nadella addressed the growing internal unease inside the tech giant Thursday morning, laying out the company's priorities and urging employees to maintain its core values, while conceding that its rapid transition for the artificial intelligence era "might feel messy at times." In a company-wide memo, Nadella acknowledged what he called the "uncertainty and seeming incongruence" of Microsoft's situation. Even with its recent job cuts, he wrote, it's thriving by "every objective measure" -- with strong market performance, record capital investments, and relatively unchanged overall headcount due to ongoing hiring. Nadella pointed out that "some of the talent and expertise in our industry and at Microsoft is being recognized and rewarded at levels never seen before. And yet, at the same time, we've undergone layoffs." "This is the enigma of success in an industry that has no franchise value," he wrote. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." The memo represents Nadella's most direct attempt yet to reconcile the fundamental contradictions facing Microsoft and many other tech companies as they adjust to the AI economy. Microsoft, in particular, has been grappling with employee discontent and internal questions about its culture following multiple rounds of layoffs. In the memo, which was also published on Microsoft's corporate blog, Nadella said the layoffs have been "weighing heavily" on him, calling these decisions "among the most difficult we have to make." He expressed "sincere gratitude to those who have left," noting that "their contributions have shaped who we are as a company." Capital spending and job cuts The company has laid off more than 15,000 employees so far in 2025, including 9,000 in early July alone, marking one of the most aggressive periods of job cuts in its history. Company leaders have cited shifting business priorities and the need to operate more efficiently as the rationale behind the layoffs, rejecting suggestions that AI productivity gains are directly eliminating jobs at this point. At the same time, Microsoft is positioning itself as a global leader in AI-driven economic development, launching a $4 billion "Elevate" initiative to help millions of people worldwide gain new skills for the AI era. Company executives say that these parallel efforts are necessary to adapt to technological change. However, Microsoft President Brad Smith acknowledged in a recent interview with GeekWire that record capital expenditures -- an estimated $80 billion over the past year -- have put pressure on the company to reduce operating costs, which in tech typically means reducing headcount. Microsoft is racing to expand its data center footprint and acquire AI chips and infrastructure to maintain a competitive edge in the emerging AI economy. Microsoft has hired more than 24 employees from Google DeepMind in the past six months, according to a tally by the Financial Times. It's part of a broader war for AI talent, fueled by Meta and others. Inside the company, the cutbacks have fueled broader concerns about Microsoft's workplace culture, with some employees and former staffers saying the handling of the layoffs has eroded the more compassionate environment Nadella fostered over the past decade. "No company is perfect, but according to my friends, Microsoft has transformed from a good company into a shameful company with little-to-no internal integrity," wrote James McCaffrey, a former longtime Microsoft senior research development engineer, detailing the issues in a July 18 blog post that has circulated widely among current and former employees. He added, "Microsoft has gone through rough stretches before. I hope the company can rebound and become an admirable company again." Multiple reports have described employees being blindsided by abrupt terminations, while others say they are now operating in a culture of fear and heightened performance pressure. Some longtime employees have expressed concern that they may be witnessing a return to the "old Microsoft" -- marked by internal rivalries, poor communication, and job insecurity -- after a decade of more inclusive and empathetic leadership under Nadella as CEO. Microsoft's three business priorities In his memo Thursday morning, Nadella described Microsoft's long-term evolution from a "software factory" to an "intelligence engine" that empowers everyone to create their own AI-powered tools. He laid out three business priorities -- security, quality, and AI transformation -- calling the first two "non-negotiable" given that Microsoft's infrastructure is now "mission critical for the world." Nadella described this paradox as part of a broader transformation requiring Microsoft to go through a difficult process of "unlearning" and "learning" -- maintaining its current successful businesses while simultaneously creating new categories and business models. He called this dual mandate "inherently hard" and said "few companies can do both." At the same time, he wrote, "I have full confidence that we can, and we will once again find the resolve, courage, and clarity to deliver on our mission in this new paradigm." Nadella compared the current moment to the PC revolution of the early 1990s, telling employees: "Years from now, when you look back at your time here, I hope you'll say: 'That's when I learned the most. That's when I made my biggest impact. That's when I was part of something transformational." The Microsoft CEO said he would share more details during the company's earnings report next week and address employee questions at an upcoming town hall meeting. Read the full memo here.

Microsoft CEO says job cuts have been weighing on him, says AI transition could be "messy"

In a company-wide memo to workers, Microsoft CEO Satya Nadella has said the company's recent job "eliminations" have been "weighing heavily" on him. Nadella explained he "acknowledge[s] the uncertainty and seeming incongruence of the times we're in" - even though Microsoft is "thriving" and headcount remains largely unchanged, many thousands have still lost their jobs, largely due to AI-induced efficiency upgrades. To justify the workforce changes, Nadella explained roles are being redefined due to evolving customer needs, and how users go about getting work done. The news comes as the company's capital expenditure continues to rise - Microsoft plans to spend about $80 billion on AI infrastructure alone in 2025 - and yet layoffs may only save a small portion of this spend. However, recent cuts have triggered widespread employee discontent, fear and dropping morale, with many fearing that the company could return to 'old Microsoft' where internal rivalries, poor communication and job insecurity make it an unpleasant company to work for. Around 9,000 Microsoft workers lost their jobs in July 2025, with around 6,000 also going in May and several hundred in other, smaller adjustments. Likening the current situation to the early 1990s when PCs and productivity software became democratized, Nadella noted: "It might feel messy at times, but transformation always is. Teams are reorganizing. Scopes are expanding. New opportunities are everywhere." The CEO also expressed that progress isn't always linear, and in this case, it could be dynamic, dissonant and demanding. Nadella also committed to addressing employee concerns at the company's next Town Hall meeting, as well as sharing more details in the earnings call, set for July 30.

Satya Nadella on the 'enigma of success' in the age of AI: a thriving business, but 15,000+ layoffs

Microsoft, one of the world's most valuable tech companies, is undergoing a sweeping internal transformation punctuated by mass layoffs, even as its financial performance soars and its ambitions in artificial intelligence reach unprecedented heights. In a memo sent to employees on July 24, CEO Satya Nadella outlined the paradox at the heart of Microsoft's current moment: ongoing job cuts amid record profits, bold AI investment, and a corporate culture in flux. The scope of Microsoft's 2025 layoffs is considerable. More than 15,000 positions -- about 7% of the company's global workforce -- have been eliminated since January, making this the company's largest personnel reduction since the 2014 cuts following the Nokia acquisition. The latest and most significant wave came in July, when roughly 9,000 employees, or 4% of staff, were informed their roles were being eliminated. These latest reductions followed prior rounds in May and June, which saw thousands more let go as the company aggressively reshaped itself for the AI era. In his July memo, Nadella directly addressed the seeming contradiction at the heart of the layoffs. "By every objective measure, Microsoft is thriving -- our market performance, strategic positioning, and growth all point up and to the right," he wrote, noting the company's capital expenditures, largely fueled by investments in AI and cloud infrastructure, are at historic highs. Despite these investments, he said headcount "is relatively unchanged," given the simultaneous reduction of jobs. Nadella called this tension the "enigma of success in an industry that has no franchise value," arguing that success in tech is not permanent or evenly distributed. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." Expressing gratitude to those let go, Nadella acknowledged the human cost. "Their contributions have shaped who we are as a company, helping build the foundation we stand on today. And for that, I am deeply grateful." Nadella rooted Microsoft's new direction in three core business priorities: security, quality and AI transformation. He said in the era of AI, Microsoft's mission must move from building static tools to empowering every person and organization to build their own. Nadella described a vision where "all 8 billion people could summon a researcher, an analyst, or a coding agent at their fingertips." The company, he said, is pivoting from a "software factory" to an "intelligence engine" -- an acknowledgment that AI is now the lens through which Microsoft will view every product, service, and business unit. This transition comes with heavy investment: Microsoft is pouring $80 billion into AI infrastructure this fiscal year, redeploying capital and, crucially, shifting a portion of the workforce to make room for these new bets. Nadella issued a call to action to stem anxieties around job security and morale, urging employees to maintain a "growth mindset" and approach the messiness of transformation with humility and resolve. "It might feel messy at times, but transformation always is. Teams are reorganizing. Scopes are expanding. New opportunities are everywhere," he wrote, describing the current focus on AI as similar to the 1990s tech revolution in PCs and productivity software. Microsoft's sweeping job cuts echo a wider trend among tech giants in 2025, as companies recalibrate for a post-pandemic market increasingly defined by AI-driven automation. By one count, more than 80,000 jobs have been slashed in the tech industry this year. Nadella's memo did not rule out further layoffs and also did not promise stability, seeking to unify staff around the mission to "empower others to build now."

Microsoft's Satya Nadella says job cuts have been 'weighing heavily' on him

Microsoft Chairman and CEO Satya Nadella during the Microsoft Build opening keynote in Seattle, on May 21, 2024.Jason Redmond / AFP via Getty Images file Microsoft has laid off over 15,000 people so far in 2025. The stress of the belt-tightening has gotten to CEO Satya Nadella. "Before anything else, I want to speak to what's been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations," Nadella wrote in a memo to employees Thursday. After Microsoft's latest labor reductions, investors pushed the stock's closing price above $500 for the first time on July 9. The company announced the layoffs of about 9,000 people a week earlier. Microsoft employed 228,000 people as of June 2024. It hasn't provided a new figure that takes into account its layoffs this year, but Nadella wrote that headcount is basically flat. "This is the enigma of success in an industry that has no franchise value," he wrote. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." The cuts at Microsoft are reflective of an overall trend across the tech industry, with over 80,000 positions eliminated to date in 2025, according to one count. Recruit Holdings announced earlier this month that it would lay off 1,300 people from its human resources technology segment that includes the Indeed and Glassdoor websites. The company's CEO pointed to artificial intelligence in a memo, Bloomberg reported. On social media in recent months, some Microsoft employees have become disheartened about the company's cutbacks, given its stature. "I have loved working for this company, still do, but this has done so much damage to that loyalty because it has shown that Microsoft's espoused values do not apply to business decisions at the macro level," a person who lists themselves as a Microsoft directed on LinkedIn posted last week. Microsoft is the world's most valuable public company after Nvidia, whose chips have become a critical piece of the AI arms race. Microsoft's Windows and Office franchises remain dominant, and its Azure cloud services have seen faster growth in recent years as OpenAI and other companies rent out Nvidia graphics cards to run AI models. In the memo, Nadella touched on Microsoft's mission for the past 10 years, which has been to empower every person and every organization on the planet to achieve more, and how the rise of AI is changing it. "We must reimagine our mission for a new era," he wrote. "What does empowerment look like in the era of AI? It's not just about building tools for specific roles or tasks. It's about building tools that empower everyone to create their own tools. That's the shift we are driving -- from a software factory to an intelligence engine empowering every person and organization to build whatever they need to achieve."

"Microsoft is thriving," claims CEO, doubling down on AI after 9000 employees lost jobs in latest layoffs

"What we've learned over the past five decades is that success is not about longevity. It's about relevance." "Microsoft is thriving," said CEO and chairman Satya Nadella in a new statement following a round of layoffs earlier this month that cost 9000 employees their jobs. The statement, shared publicly and with Microsoft employees, reiterates the company mission, with Nadella doubling down on the importance of AI. First, he acknowledged the layoffs. "I want to express my sincere gratitude to those who have left," he said. "Their contributions have shaped who we are as a company, helping build the foundation we stand on today. And for that, I am deeply grateful." He continued: "I also want to acknowledge the uncertainty and seeming incongruence of the times we're in. By every objective measure, Microsoft is thriving - our market performance, strategic positioning, and growth all point up and to the right. We're investing more in CapEx than ever before. Our overall headcount is relatively unchanged, and some of the talent and expertise in our industry and at Microsoft is being recognised and rewarded at levels never seen before. And yet, at the same time, we've undergone layoffs. "This is the enigma of success in an industry that has no franchise value. Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." It's clear that AI is now at the heart of Microsoft, as Nadella stated its three business priorities are security, quality, and AI transformation. "We are doubling down on the fundamentals while continuing to define new frontiers in AI," he said. "What does empowerment look like in the era of AI? It's not just about building tools for specific roles or tasks. It's about building tools that empower everyone to create their own tools. That's the shift we are driving - from a software factory to an intelligence engine empowering every person and organisation to build whatever they need to achieve." Discussing company culture, Nadella stated: "Growth mindset has served us well over the last decade - the everyday practice of being a learn-it-all, not a know-it-all. It has reshaped our culture and helped us lead with greater humility and empathy. We need to keep that." He continued: "It might feel messy at times, but transformation always is. Teams are reorganising. Scopes are expanding. New opportunities are everywhere. It reminds me of the early '90s, when PCs and productivity software became standard in every home and every desk! That's exactly where we are now with AI. "Years from now, when you look back at your time here, I hope you'll say: 'That's when I learned the most. That's when I made my biggest impact. That's when I was part of something transformational'. "What we've learned over the past five decades is that success is not about longevity. It's about relevance. Our future won't be defined by what we've built before, but by what we empower others to build now." Nadella's statement comes three weeks after over 9000 employees were laid off from the company, which Microsoft told Eurogamer was "necessary to position the company and teams for success in a dynamic marketplace". While the total number of laid off employees in gaming positions is unknown, the likes of Rare's Everwild, The Initiative's Perfect Dark reboot, and a new ZeniMaz MMORPG were cancelled. Roughly 200 staff from Candy Crush developer King were laid off and have reportedly been replaced by the AI tools they helped to build. The team at Turn 10 Studios behind Forza Motorsport is also reportedly "no more". The knock-on effect has also resulted in funding being cut for Romero Games' next project, though contrary to reports the studio has not closed. "And, as even AI's biggest proponents will usually admit, it is fundamentally incapable of actually learning anything," wrote Eurogamer's Chris Tapsell in response to the recent layoffs at Microsoft. "Creative industries such as video games are human ones, existing because of deeply human urges, irrepressible natures and drives. Drives which run in direct opposition to the horrifying inhumanity of the people who run them."

Microsoft CEO consoles employees by saying recent layoffs are 'the enigma of success in an industry that has no franchise value'

This month began with some stark news for Microsoft employees: The business was doing better than ever before, and that somehow means layoffs. Around 9,000 employees were laid-off globally, studios were closed, games were cancelled, and then to rub salt in the wound some Microsoft exec with terminal LinkedIn brain suggested that those affected use AI to console themselves. Judging by the latest bizarre missive from Microsoft chairman and CEO Satya Nadella, that very executive is probably in line for a promotion. There's executive leadership verbiage, and then there's Nadella in full flow, an endless spewer with terrifying levels of executive power and a cheery disregard for the economic realities of the little people. Ahem. In a new blog titled "Recommitting to our why, what and how" Nadella takes off, first of all bravely addressing the question of why Microsoft has just fired so many folks. "I want to speak to what's been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations," writes Nadella. Then it's on to the "seeming incongruence" of the fact that "by every objective measure, Microsoft is thriving -- our market performance, strategic positioning, and growth all point up and to the right [...] And yet, at the same time, we've undergone layoffs." Get ready because, in the annals of executive bullshit, this is a beauty. "This is the enigma of success in an industry that has no franchise value," writes Nadella. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding. But it's also a new opportunity for us to shape, lead through, and have greater impact than ever before." I'm not sure exactly what Nadella means by "franchise value" but neither's he, and that's the point. Is the suggestion that big tech can fail overnight with a bad product? Because Microsoft's history and de facto monopoly certainly suggests otherwise! There's more nonsense about "creating new categories with new business models and a new production function" and, naturally, a reference to "this new paradigm." Then we get into the titular "why, what, and how" of Microsoft's "mission" and surprise surprise people: it's AI! "What does empowerment look like in the era of AI?" Nadella wonders. "It's about building tools that empower everyone to create their own tools. That's the shift we are driving -- from a software factory to an intelligence engine empowering every person and organization to build whatever they need to achieve." There's some nonsense about AI changing everything because "that's the empowerment our mission enables, creating local surplus in every company, community, and country." Local surplus? What, of laid-off workers? Is that the future Satya? The guy's language really makes my head hurt at points, but I can say one thing -- Copilot couldn't come up with this: "We will reimagine every layer of the tech stack for AI -- infrastructure, to the app platform, to apps and agents. The key is to get the platform primitives right for these new workloads and for the next order of magnitude of scale. Our differentiation will come from how we bring these layers together to deliver end-to-end experiences and products, with the core ethos of a platform company that fosters ecosystem opportunity broadly. Getting both the product and platform right for the AI wave is our North Star!" The LinkedIn nerds are gonna love this line: "Growth mindset has served us well over the last decade -- the everyday practice of being a learn-it-all, not a know-it-all." This is good, apparently, and "it might feel messy at times, but transformation always is." Nadella claims that where AI is now "reminds me of the early '90s, when PCs and productivity software became standard in every home and every desk!" Don't ask why. "What we've learned over the past five decades is that success is not about longevity," says Nadella. "It's about relevance. Our future won't be defined by what we've built before, but by what we empower others to build now." It seems to me that the main thing Microsoft is empowering people to build is the latest version of their CV, but I digress. Nadella's unique mode of expression aside, this is mostly just another tone-deaf missive from a corporation that truly seems to specialise in them. Perhaps the most concrete take-away from all of this though is that "we will reimagine every layer of the tech stack for AI -- infrastructure, to the app platform, to apps and agents." AI may not do everything the boosters say, in other words: but it's here to stay anyway and, if you think it's been obtrusive up to now, you really haven't seen anything yet.

Microsoft's Nadella addresses 'incongruence' between huge profits, layoffs

Weeks after Microsoft's latest round of layoffs, CEO Satya Nadella addressed the elephant in the room. The company is enjoying record financial success. Yet it's laid off 15,000 employees since May. In a memo to employees on Thursday that was later made public, Nadella said the layoffs he and the company enacted were "weighing heavily" on him. Amid a souring culture and a fundamental technology shift in the industry, he also acknowledged the "uncertainty and seeming incongruence" between the job cuts and a healthy balance sheet. Nadella said that by every measure, Microsoft is thriving. Market performance and revenue growth are heading straight up and the company is spending more on investments than ever before. Every three months Microsoft posts record quarterly revenue and profit, with sales from its cloud-based products finding success with both consumer and commercial customers. The company also has lower operating costs than its cloud rival Amazon, which gives Microsoft greater profit margins. The company reported more than $70 billion in revenue during the first three months of the year, with more than $25 billion in profit. Microsoft will report financial results for the months of April, May and June next week. "This is the enigma of success in an industry that has no franchise value," he said. "Progress isn't linear. It's dynamic, sometimes dissonant, and always demanding." Microsoft's layoffs hit employees in at least three waves between May and July. The company first laid off more than 6,000 people in May, followed by another 312 in June and more than 9,000 in July. Unlike during mass layoffs in the past, there wasn't a memo from Nadella or members of the senior leadership team. The layoffs weren't fueled directly by artificial intelligence, one of Microsoft's primary focuses. Workers aren't being replaced by automation, according to the company. But Microsoft President Brad Smith told GeekWire earlier this month that the company's AI investments, an estimated $80 billion over the past year, are creating pressure on operating costs. Those investments are largely in building out data centers and acquiring AI computer chips to meet a growing demand. The company is risking a culture of fear with successive layoff rounds as it prioritizes the company around AI projects. The layoffs feel random but those who aren't working directly on new AI products worry they may be next. Microsoft's push into AI is causing shifts throughout the company, which some longtime employees may not feel comfortable with. Nadella said this "might feel messy at times, but transformation always is." He said more teams will reorganize and jobs scopes will expand. That's fitting into Microsoft's limited explanations for the layoffs. The company's statements said it's striving for more streamlined and agile teams, with more employees per manager throughout the corporate workforce. Internal memos from certain divisions have also told employees that they can expect a blurred line between product managers and other roles. "This platform shift is reshaping not only the products we build and the business models we operate under, but also how we are structured and how we work together every day," Nadella said. As he approached employees with his conciliatory tone, Nadella also laid out a challenge that is the future of Microsoft. Microsoft is going through a "difficult process of unlearning and learning," to meet changing customer needs. But to be successful, while the company is creating new categories and new business models, it will maintain and scale current businesses. "This is inherently hard," Nadella said. "And few companies can do both."

Microsoft's CEO Says the Company's Mass Layoffs, Despite Financial Success, Are 'Weighing Heavily on Me' in an Internal Memo

Despite Microsoft's position as the No. 2 most valuable company in the world, behind Nvidia, with a market value of $3.8 trillion, the tech giant has laid off more than 15,000 people this year. In a memo to staff on Thursday morning, released publicly on Microsoft's corporate blog, Microsoft CEO Satya Nadella addressed the recent job cuts, calling the decisions some of "the most difficult" that he had to make. "Before anything else, I want to speak to what's been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations," Nadella wrote. Related: Microsoft Is Laying Off More Workers as AI Continues to Trim Workforces Nadella acknowledged "the uncertainty and seeming incongruence of the times we're in" but noted that Microsoft is "thriving," with exceptional market performance, strategy, and growth. For example, Microsoft's stock price rose to an all-time high, hitting a closing price above $500 for the first time earlier this month. Nadella also stated that the company is investing more in AI infrastructure than ever before, pouring over $80 billion into AI in the fiscal year that ended in June. "Microsoft is being recognized and rewarded at levels never seen before," Nadella wrote. "And yet, at the same time, we've undergone layoffs. This is the enigma of success in an industry that has no franchise value." Nadella explained the disconnect between thriving financials and layoffs by stating that "progress isn't linear" and that it is "sometimes dissonant, and always demanding." He noted that headcount at Microsoft "is relatively unchanged" as the company continues to hire new workers, and he doesn't promise that there won't be more layoffs in the future. Microsoft reported employing 228,000 workers as of June 2024. In the memo, Nadella also redefined Microsoft's mission from a "software factory" to an "intelligence engine." He said that the company's future opportunity was to bring AI to all eight billion people on the planet. Related: Microsoft Executive Says Using AI Has Saved $500 Million in Productivity Costs, as the Company Conducts Mass Layoffs Meanwhile, Microsoft has made huge profits recently, with its net income equaling about $75 billion across its last three fiscal quarters. For the first three months of 2025, the company's profit rose to $25.8 billion, up 18% from the previous year, beating Wall Street expectations. Microsoft stock is up 22% year-to-date.

Microsoft's job cuts weigh heavily on me: CEO Satya Nadella - The Economic Times

Earlier this month, Microsoft confirmed it would reduce its global workforce by around 4%. The company had already announced in May that about 6,000 roles would be cut. Satya Nadella has spoken about the recent layoffs at the company, stating that the current job eliminations were among the most difficult decisions for the organisation.Microsoft chairman and chief executive Satya Nadella has spoken about the recent layoffs at the company, stating that the current job eliminations were among the most difficult decisions for the organisation. In a memo to staff on Thursday, he wrote, "Before anything else, I want to speak to what's been weighing heavily on me, and what I know many of you are thinking about: the recent job eliminations. These decisions are among the most difficult we have to make. They affect people we've worked alongside, learned from, and shared countless moments with -- our colleagues, teammates, and friends," he said. Earlier this month, Microsoft confirmed it would reduce its global workforce by around 4%. The company had already announced in May that about 6,000 roles would be cut. Microsoft, which had about 228,000 staff as of June 2024, also said it would streamline internal structures by reducing the number of managers and simplifying how teams and products are organised. Also Read: Tech layoffs: Amazon, Intel to cut more jobs amid AI push, cost control "Our overall headcount is relatively unchanged, and some of the talent and expertise in our industry and at Microsoft is being recognised and rewarded at levels never seen before. And yet, at the same time, we've undergone layoffs" Nadella said in his memo. Microsoft's AI-driven strategy While noting the mission for the upcoming fiscal year, Nadella highlighted the transformational shift at Microsoft. "When Bill (Gates) founded Microsoft, he envisioned not just a software company, but a software factory, unconstrained by any single product or category. That idea has guided us for decades. But today, it's no longer enough," Nadella said. "It's not just about building tools for specific roles or tasks. It's about building tools that empower everyone to create their own tools. That's the shift we are driving -- from a software factory to an intelligence engine empowering every person and organization to build whatever they need to achieve," he added. Cost saving Microsoft's chief commercial officer, Judson Althoff, revealed during a presentation earlier this month that AI is improving productivity across departments, from sales and customer service to software engineering. Althoff said that AI helped Microsoft save over $500 million in its call centres alone last year and led to higher employee and customer satisfaction. While it's not clear whether the recent jobs were directly taken over by AI, Nadella had previously said that artificial intelligence writes between 20% to 30% of the code in the company's repositories.

Microsoft axes 9,000 jobs -- then tells staff to use AI to cope with the fallout

Microsoft recently laid off 9,000 employees despite its financial success, citing a shift towards AI. CEO Satya Nadella emphasized AI's central role in the company's future, envisioning Microsoft as an "intelligence engine." This restructuring includes reimagining the tech stack for AI and prioritizing innovation, though the message was perceived as insensitive given the job losses. Microsoft recently laid off about 9,000 employees worldwide, even though the company is doing very well financially. The layoffs included game studios getting shut down and some game projects being canceled. What made it worse was a suggestion from a Microsoft executive that laid-off employees could use AI tools to help them "cope" with the situation. Microsoft CEO Satya Nadella posted a blog titled "Recommitting to our why, what and how," trying to explain the layoffs, as per the report by PC Gamer. ALSO READ: Karoline Leavitt & Lara Trump debut bold MAGA makeovers -- you won't believe the transformation Nadella admitted layoffs were "weighing heavily" on him, even while admitting that Microsoft is thriving with strong market growth and performance. He called this situation "the enigma of success" and claimed the tech world is always changing and not always logical. He mentioned terms like "no franchise value," "new business models," and "new paradigms," though he didn't clearly explain what they meant. Nadella's message shifted to focusing heavily on artificial intelligence (AI), calling it central to Microsoft's mission going forward, as stated in the report by PC Gamer. He said Microsoft will help people create their own tools using AI, turning Microsoft into an "intelligence engine." He claimed that AI will bring "local surplus" to every company and country, but didn't clarify how that applies to the workers just laid off. Nadella said Microsoft plans to "reimagine every layer of the tech stack for AI", from infrastructure to apps. He believes Microsoft's strength will come from connecting AI tools across all platforms to build better user experiences, as per the Yahoo Finance report. ALSO READ: TSA just made 4 big changes -- here's what every US traveler needs to know before flying Nadella also talked about having a "growth mindset" and being a "learn-it-all" instead of a "know-it-all." He compared AI's current moment to the early 1990s when personal computers became widespread, saying it's another big shift. Nadella added that success isn't about how long a company has existed, but about staying "relevant" in today's world, as per the PC Gamer report. The overall message seemed tone-deaf to many, especially since thousands just lost their jobs while Microsoft talks about an exciting future in AI. In the end, it's clear Microsoft is betting big on AI, and the company wants to be a leader in shaping the future of tech through it, according to the report by Yahoo Finance. Q1. Why did Microsoft lay off 9,000 employees in 2025? Microsoft laid off 9,000 employees to restructure the company and focus more on AI technology, despite strong financial performance. Q2. How is Microsoft using AI after the layoffs? Microsoft plans to use AI to build new tools and products and wants employees and customers to create their own AI-powered solutions.

Satya Nadella Calls Microsoft's AI Shift 'Messy' After 15,000 Layoffs

Why Microsoft's AI Transformation Faces Scrutiny After Massive Layoffs and Satya Nadella's Honest Take In a major workforce shake-up, Microsoft has laid off approximately 15,000 employees as part of its strategic pivot toward artificial intelligence. CEO Satya Nadella acknowledged the transition has been 'messy,' reflecting the internal challenges the company faces in adapting to rapid advancements in AI. The layoffs mark one of the most significant restructuring moves in Microsoft's recent history, aimed at reallocating resources toward AI-driven products and services. While the company continues to lead in AI innovation, Nadella's candid admission underscores the strain such shifts can place on large organizations.