The Microsoft layoffs (theyâ€™re reducing headcount by approx 5.21%) announced last week have been well and truly covered, with many (like Mini) saying itâ€™s too little, too late, and others lamenting that a company of Microsoftâ€™s stature has â€˜steepedâ€™ to get rid of itâ€™s biggest asset.
My opinion? Well, itâ€™s just business right? Iâ€™m sure the decision wasnâ€™t made lightly, and who am I to conjecture as to what the proper decisions should have been? Check back when Iâ€™m heading up a billion dollar company and I might just have something worth hearing in that regardâ€¦
Is it the right decision? Time will tell.
My understanding is they mean something along the lines of â€˜getting rid of the stuff (usually people) that arenâ€™t really seen as benefiting the businessâ€™.
Now, Iâ€™m guessing that Microsoft doesnâ€™t just hire people for the sake of it. (Of course, weâ€™ve all seen companies with layers of useless management and wasted resource, and no doubt there is a bit of that in the halls at MS as well. But the main, Iâ€™m going to assume that most of their hires are beneficial and add value.)
So, theoretically, Microsoftâ€™s hiring over the last 12 months (they increased headcount by approx 14%) has been pursuant to a business strategy. One that they intend to make money from.
The question thus becomes: At what point does the short-term cost outweigh the future return?
And the part answer: When the future timeline gets extended.
So, this isnâ€™t about â€˜trimming fatâ€™, this is about timelines. Microsoft is simply indicating that they believe the current economic conditions are here for a while. No real surprises there.
For Microsoft, the economic downturn is going to be here longer than they originally thought, and longer than the time it takes to get a solid return from their recent hiring strategy. But interestingly, not for all their strategies. A 14% increase over the last 12 months and a 5% decrease over the next 12, indicate that Microsoft still has confidence in some of their strategies from last year.
My question: How confident am I in Microsoftâ€™s confidence? Is now the time to start buying MS stock?