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Microsoft Restructures Workforce, Lays Off 1900 From the Gaming Division Despite Stellar Performance

Microsoft is restructuring its workforce from the Xbox and Activision Blizzard divisions. This is a continuation of layoffs in the Tech sector continuing since 2023.


 


This represents 8% of the total workforce employed in the gaming division of Microsoft. This is largely happening for Activision Blizzard citing an internal memo presented to the Verge, a news website from Phil Spencer, head of the gaming division. Microsoft has remained quiet on the issue. 


 


Top management of Activision Blizzard has also been culled with Allen Adham and Mike Ybarra leaving the company.  A major survival game has been cancelled which was announced earlier said the report.


 


Microsoft has been in the news lately for being the second most valuable company by market cap namely 3 trillion USD. It enjoyed this position only briefly when it hit USD 404 per share. Apple has topped this exclusive list.


 


The Activision Blizzard deal was closed for USD 69 Billion by Microsoft making Microsoft a gaming heavyweight with Triple A titles like “Call of Duty” to level the playing field with Sony.


 


In January it is estimated that nearly 21,000 workers have been laid off in January alone from 76 tech firms. There were 168,032 jobs cut in 2023. It was the highest number of layoffs across all industries according to a report by Challenger, Gray and Christmas. This included 10,000-plus cuts at the software giant Microsoft.


 


AI is considered the primary reason for these layoffs. The attempt is to offset billions that have been invested in AI but they are going to downsize fewer workers according to analysts and experts. Investors have been bullish about  Microsoft's advances and investments in AI. To date, Microsoft shares are up 7%.


 


Microsoft has been the most valuable company for two weeks ago albeit temporarily. Microsoft's leadership in Generative AI has made analysts expect a stellar performance in its Q2 earnings according to Citi.


 


Morgan Stanley analysts have said Microsoft’s product and positioning in AI given their remarkable contributions. They are so optimistic about the stock that they have given a price target of $450 from $415 earlier.


 


The layoffs were after Discord, Google, Twitch, Riot Games, eBay and others announced layoffs.


Leadership changes also at Microsoft with Booby Kotick stepping down in end-December 2023, now the executives report to Matt Booty in Activision Blizzard.


 


Sarah Bond was announced as Xbox President some months back thus leading the gaming divisions' software, content and hardware. Microsoft has been fighting regulators to acquire Activision-Blizzard in the US and UK.


 


All are awaiting Jan 30 when Microsoft declares its financials for Q2.


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