Microsoft’s belt-tightening is the latest sign of the economic times – GeekWire

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Microsoft executives Brad Smith, Satya Nadella and Amy Hood answer shareholder questions during the company’s 2018 annual meeting. (GeekWire File Photo/Nat Levy)

“As we navigate this period, we will continue to invest in future growth while maintaining an intense focus on operational excellence and execution discipline.” — Amy Hood, CFO of Microsoft, July 2022.

“Given the choice, we prefer the weenies over the shrimp.” — Mike Murray, then head of human resources at Microsoft, May 1993.

These two comments from Microsoft executives are separated by nearly three decades and two very different communication styles, but the underlying message is the same: save money when you can, people.

An article from the Wall Street Journal this morning says Microsoft “is asking teams across the company to limit certain employee expenses,” such as business travel and gatherings. The report cites, as an example, a recent picnic for a Microsoft team where officials paid for food and drinks personally rather than bearing the cost.

Hood’s comments above are from Microsoft’s fiscal fourth quarter earnings conference call, explaining the company’s approach to financial analysts. People inside the company say it reiterated the point at an internal meeting to start the fiscal year, asking employees to think hard before spending Microsoft’s money.

The report recalled the legendary “Shrimp vs. Weenies” memo from Microsoft’s past.

Fast forward to mid-2022, and it’s the latest example of tech companies looking to rein in spending in the face of economic uncertainty, as they prepare for the possibility of a recession or a financial downturn.

Microsoft went through a series of layoffs to start the fiscal year and eliminated many of its vacant positions. As part of the belt tightening, the company is also reportedly made cuts to his Modern Life Experiences (MLX) group.

The MLX Group includes Microsoft Family Safety Parental Controls, which has been reportedly affected by layoffsbut ZDNet’s Mary Jo Foley reports that Microsoft does not suspend this service.

Before the cuts, the company added a record 40,000 employees in its last fiscal year. Another 11,000 hires begin in the first quarter, mostly in cloud engineering, LinkedIn, customer deployment and commercial sales, Hood told analysts on the conference call. Beyond that, however, growth is expected to slow markedly.

Microsoft’s revenue rose 12% in its latest quarter to $51.9 billion, with profits up 2% to $16.6 billion, missing Wall Street expectations on both measures financial.

Listen to the latest episode of the GeekWire podcast below to learn more about the economic outlook for Microsoft and other big tech companies.

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