Microsoft, amid layoffs, says quarterly profit declined 12%

Category: Technology/Innovations


Unlocking Word Meanings

Read the following words/expressions found in today’s article.

  1. exclude / ɪkˈsklud / (v.) – to leave something or someone out

    The school cannot exclude any student from the examination.

  2. top / tɒp / (v.) – to get a higher amount than something else

    Our sales are expected to top $500,000 by the end of the month.

  3. poll / poʊl / (v.) – to ask a large number of people questions to get information about something

    We polled over 750 students about their favorite clothing brand.

  4. deterioration / dɪˌtɪər i əˈreɪ ʃən / (n.) – the process of becoming worse

    The deterioration of air quality in the city has affected people’s health.

  5. install / ɪnˈstɔl / (v.) – to add a new computer program to a computer

    Have you installed anti-virus software on this computer?


Read the text below.

Microsoft reported a 12% drop in profit for the October-December quarter, reflecting the economic uncertainty it said led to its decision to cut 10,000 workers.

The company reported quarterly profit of $16.43 billion, or $2.20 per share.

Excluding one-time items such as $800 million to pay severance to laid-off employees, the company based in Redmond, Washington, said it earned $2.32 a share, which topped Wall Street expectation for adjusted earnings of $2.29 a share. Microsoft’s stock was up more than 4% in extended trading following the release of its earnings report.

The software maker posted revenue of $52.75 billion in the October-December period, its second fiscal quarter, up 2% from the same period a year ago. Analysts polled by FactSet expected Microsoft to post revenue of $52.99 billion for the quarter.

Microsoft blamed “macroeconomic conditions and changing customer priorities” for its decision to cut nearly 5% of its global workforce. It’s one of a number of tech companies, including Google, Amazon, Salesforce and Facebook parent Meta, to announce mass layoffs.

Microsoft’s personal computing business, centered on its Windows software, was widely expected to continue a deterioration that began earlier last year due to economic uncertainties and crimped demand. Quarterly sales from that segment dropped 19% to $14.24 billion, the company said.

The company gets licensing revenue from PC manufacturers who install its Windows operating system on their products.

Market research firm Gartner reported that worldwide PC shipments in the October-December quarter declined 28.5% from the same period of 2021, the steepest quarterly decline since Gartner began tracking the market in the 1990s.

Among the factors reducing consumer demand for PCs were increased inflation, higher interest rates, the expectation of a global recession and the fact that many people already bought new computers during the COVID-19 pandemic, Gartner said.

This article was provided by The Associated Press.

Viewpoint Discussion

Enjoy a discussion with your tutor.

Discussion A

  • Do you think Microsoft will be able to recover from declined profits due to reduced customer demands for PCs? Why or why not? Discuss.
  • Why do you think tech companies have been announcing massive layoffs lately? Do you think it may continue further in the coming months? Why or why not? Discuss.

Discussion B

  • What types of tech companies do you think will profit more in the future (ex. social media platforms)? What business do you think may eventually disappear (ex. software companies, PC manufacturers)? Discuss.
  • According to the article, one of the things that are reducing customer demand for PCs is increased inflation. How do you think tech companies can sell more at a time like this (ex. offer affordable payment plans, create cheaper products)? Discuss.