Behind-the-Scenes Influences on Microsoft Earnings

Microsoft’s new numbers arrive as the company faces significant activity.

First, it has started laying off 10,000 employees. Cloud providers notoriously overhired during COVID-19 peak demand and now staff are paying the price. Microsoft took an $800 million charge in its fiscal second quarter for those job cuts. It had warned of a $1.2 billion charge.

At the same time, the software giant also continues to try to close on its $68.7 billion acquisition of video game maker Activision — the largest M&A transaction of 2022. However, the U.S. Federal Trade Commission has filed a lawsuit to halt the deal.

Furthermore, as Ensono’s McKenna noted, Microsoft is funneling $10 billion into OpenAI, the company that created the much-discussed artificial intelligence tool, ChatGPT. Microsoft already was investing in OpenAI, but the new infusion stands out as the most sizable.

On the next slide, we discuss even further the importance of OpenAI to Microsoft — and rival Google.