Normally, big layoffs are good news for a company, but not today and not for tech giant Microsoft (MSFT). With Microsoft poised to lay off 650 people from the Xbox unit, the huge cost-cutting measure still was not enough to keep it from a fractional loss in Thursday afternoon’s trading.
Don't Miss Our New Year's Offers:
- Discover the latest stocks recommended by top Wall Street analysts, all in one place with Analyst Top Stocks
- Make smarter investments with weekly expert stock picks from the Smart Investor Newsletter
This is actually the third time, noted a CNBC report, that Microsoft has gone winnowing out “redundancies” in its Xbox unit following the acquisition of Activision-Blizzard. Most of these roles, the report noted, are “corporate and supporting functions.”
Meanwhile, a memo direct from Microsoft Gaming CEO Phil Spencer stated that this was a “difficult” decision, and reminded all concerned that “we are deeply grateful for the contributions of our colleagues who are learning they are impacted.” However, they would not simply be thrown to the wolves and the unemployment line: they would have “…exit packages that include severance, extended healthcare and outplacement services to help with their transition.”
All This and Service Outages, Too
Meanwhile, Microsoft also faces down service outages. Several of Microsoft’s systems, including Xbox, were down throughout the early going of Thursday morning. The list contained several of Microsoft 365’s tools, including Outlook, Azure, and Teams. The issues started up around 8:00 a.m. Eastern Time before ultimately reaching a full resolution.
It remains unclear just what caused the issue, though the Chicago Tribune noted that the issue was particularly noticeable on AT&T (T) networks. Some also wondered how much connection there was between this outage and the Azure outage seen back in July, which was the result of a distributed denial-of-service (DDoS) attack. That featured Microsoft’s own automated defenses actually working against it at one point.
Is Microsoft a Buy, Hold, or Sell?
Turning to Wall Street, analysts have a Strong Buy consensus rating on MSFT stock based on 30 Buys and one Hold assigned in the past three months, as indicated by the graphic below. After a 26.01% rally in its share price over the past year, the average MSFT price target of $502.84 per share implies 19.42% upside potential.
