Microsoft Hits Historic $3 Trillion Valuation On Same Day Of Xbox Layoffs

Well, well, well.
How the turntables turn.

I feel bad for those laid off, but this is literally business 101 when a massive transaction such as the ABK acquisition happens. Microsoft will nip/tuck as needed to keep overhead low and profits high.

Anyone upset about this obviously doesn't know how business on the top end works.

@GamingSince84

Here is the thing. Just because “that’s how business works” doesn’t mean we have to agree to it or like it. And yes, we can complain about.

Too many people excuse this type of thing, but let’s really think about it.

Microsoft is a $3 Trillion dollar company.

They paid $69 billion dollars to buy Activision-Blizzard (that’s $36 million for each of these people they fired).

Kotick alone got a $360 million payout. And the shareholders of Microsoft made big money.

Microsoft is operating at a higher level than most countries.

Three countries had a GDP of $3 trillion in 2023; the UK ($3.3t), France ($3t) and India ($3.7t). There are 4 countries that made more and the other 183 made less.

Microsoft made $146 billion in profits alone last year. Many countries have a lower total GDP than this. And Microsoft had it as surplus.

That’s similar to what the UK spends ($161 billion) annually on the National Health Service (NHS) which provides complete medical care to over 67 million people - everything from cancer treatment to operations to hospitals to whatever.

But Microsoft can’t keep 1,900 people employed after record profits that are higher than many countries GDPs “because that’s how business works.”

There have been countless lives ruined and families left without money because “that’s how business works.” While fat cats at the top rake in billions.

So I’m sorry, but this isn’t a good look and we don’t have to excuse the bad business practices of multi-trillion-dollar corporations.

@Kienda

But Activision Blizzard King does not need their own PR and HR department anymore, and there are many more jobs that won’t be necessary anymore because Microsoft already had people in place on those jobs. This is what happened after a merge. It’s not Microsoft’s job to keep people employed forever. Even if you have all the money in the world. Microsoft is still a company, not a charity.

@Kienda Yessss, exactly. People forget that corporations are beholden to their shareholders, aka if you own stock, you only care about how much more money the company can make you.

If replacing everyone with AI and leaning on subscriptions instead of new products is the easiest, fastest path forward, of course the shareholders will want that.

The question is....what do we do? It affects me because I want new games (Gears, Halo, all the Rare IPs and all the studios bought up by MS) instead of Game Pass with 1 new first-party game every 5 years and 1 Forza game every other year. I guess all I can do is buy premium titles to support new content.

This is perfectly normal. After heavy acquisitions corporations have the right to adjust it's structure.

Unfortunately lay-off is an option no matter how profitable a brand is.

We knew it was coming. Many other companies do it regardless of the revenue they made or the market share they sustain.

@Ocat I agree that Microsoft isn’t a charity. But employees aren’t expenses, they are assets.

@Kienda

Can’t have more assets then you need, because they cost allot of money.

And we don’t know who they fired. Game developers were fired last year.

@Ocat

Can’t have more assets then you need, because they cost allot of money.

"A lot of money" that will be a literal drop in the ocean compared to the $146 billion Microsoft made in profits last year.

MS are a horrible company this isn’t good news. At the same time I won’t pretend to feel sad for them laying people off.

It's always at the end of the day about money

These layoffs are only happening because Microsoft and all the other companies know a bunch of people online and in the media will call it a shrewd business decision.

@GamingSince84 100% agree. There is no incentive for MS to use even 0.01% of that revenue to hire/retain workers who could spend their time testing all of Bethesda games and at least attempting to produce something of quality. I have the same outlook on life. I had a despicable moment yesterday when a homeless man wanted some money to pay for some food!! The cheek of it! I work specifically to make money and NOT hand it out. In fact even worse he then offered to help with any odd jobs around the garden to earn the money!

It always amazes me that random people on the Internet will jump to the defence of a megacorp.

@Kaloudz And when an earthquake happens and kills a hundred people do you just shrug your shoulders and say "that's just how tectonic plates work"?

I honestly don't know what's worse, the callousness of these megarich corporations, or the absolutely pathetic shrills that defend them just because they once made a game they liked. I could not care less whether this was inevitable, whether it made good business sense. The fact is 1,900 families are waking up today scared about how they can pay their mortgage, or their medical bills, or their kid's college fees. Being made redundant is terrifying and yet what do pathetic apologists like you say about it? "Congrats to MS".

Shame.

The amount of people applauding this,when 2000 people have just lost their jobs ,is quite frankly disgusting...hey we've just ruined 2000 lives but hey we've got 3 trillion in the bank ,so happy days 🙄

@Kaloudz The lack of empathy from gamers is amazing. You don't care about those sacked because as long as your favourite corp gives you games on Gamepass you're happy.

Remember when nintendo had some poor results and Iwata took a paycut in response and refused to let people go as it would demoralise his staff and inhibit their ability to make games? How painful was it for big Phil to let people go when he's likely to collect a big bonus for it?? If he came out and made a statement now, people are so broken that they would care more about which t-shirt he wore or what was on his shelf incase he was teasing a new game. Acquisitions always lead to some job losses but the numbers here are bigger than you would expect, as its not just duplicate HR, admin, accounts etc. What would have keeping more of these people on meant, that you are worth 2.75 trillion instead of 3?? Gross

Microsoft is doing what any successful company would do, make smart business decisions to bolster profit. Sometimes that means layoffs. Yes it sucks, but I will not even begin to try and understand how all the inside stuff works. On the flip side, I cannot even imagine how those employees feel now that they are jobless. It's horrible for anyone to go through that.

I know the optics are horrible: spend billions on a company only to turn around and cut jobs. It's never anything that will look good - especially in this social media reality. And it's a horrible day for all affected - no one wants to walk into work and get a pink slip.

But if I can afford to spend billions of dollars to redo my lawn and I have 1900 people standing around staring at the people working because they have nothing to do, why pay the people to stand around with nothing to do simply because they have families to feed and mortgages to pay?

Or am I just expected to send a career horticulturist to electrician school so they can rewire my house at a later date simply because I can afford it?!

My heart goes out to these people, but headlines like this really make it sound like some fat cat is pushing the Fire button while burning hundred-dollar bills to light a million-dollar cigar. Microsoft can't just conjure work out of thin air while at the same time just keeping people on payroll who will literally show up to work and do nothing just because...feelings.

@Kaloudz So you don't feel empathy for those sacked but you're quite happy to blindly defend the Trillion Doller corp? You have interesting morals.

I don't expect you to do anything but siding with MS here really says a lot about you as a person.

@Kaloudz End of the day you're on a Xbox site, Xbox is your console of choice and MS makes Xbox's. You aren't going to call out MS because that would mean being negative about the Corp who makes your favourite gaming toy. As i said gamers especially younger ones tend to lack empathy as they never really had to deal with life. You caring or not about those sacked isn't the point though its being pro MS on something that is news that only benefits MS higher ups . Funny enough this attitude is quite common here hence why i rarely comment on here.

@GamingSince84 Noooooool Mega corporation HAS to keep undeeded social media managers and unnecessary x consultants and y advisors!!!!

@DennisReynolds What do you expect Microsoft to do? I guess I don't understand what there is to "call out"? A $3 Trillion company has the money to pay people to do...what exactly? Work how? If someone is already doing the work what are the other people supposed to do Monday morning? Come in to work and read a magazine because Microsoft is worth $3 trillion, so, whatever?

Let's say Microsoft wasn't a $3 Trillion corporation but say a $300,000 plumbing business that recently bought another plumbing business for...whatever reasons...expansion...maybe to save plumber jobs from a poorly managed business...use your imagination.

Now let's say that merged business kept all 15 extra plumbers from the previous business, but now had 6 people in the HR and payroll departments that were no longer needed because it already had 6 people doing the job and 12 people is just too much.

Should that plumbing company train HR and payroll people to become plumbers despite having absolutely no skills as plumbers at all? Should it just create some random position on the fly just so people don't lose employment? How is it fair for the people working that others who aren't working get the same money for doing nothing?

Should the plumbing company NOT have bought the other company and saved 15 other people from losing jobs or even create new positions for even more plumbers at the expense of 6? Okay, maybe it creates 1 extra position in that department to handle the extra workload created with bigger business, but that's still jobs lost.

The logic of business doesn't change whether you are a $300 company, a $300,000 company or a $3 Trillion company. It's just the scale is different.

I am sad for the people. I hope that they had a little bit of foresight and were in a position to have a little saved up. I hope the severance package provided is also ample. I hope there are plenty of positions at other companies in the areas where they live that will scoop them up sooner, rather than later.

But I guess I just don't see what there is to "call out" other than we see this $3 trillion dollar value and think Microsoft has unlimited funds to throw to the wind simply because...trillions.

While it's unfortunate news, this has all been timed in with a historic milestone for the tech and gaming giant. On the same day, the company - led by Chairman, CEO and longtime employee Satya Nadella, has actually reached a $3 trillion market cap for the first time in its history

Terrible optics doesn't even begin to describe how this looks for Microsoft, following the layoffs announcement 😕. There is really no easy way to put this into context....

Bet the people that lost their jobs do more work and contribute more than those at the top. That’s probably how it is in most places to be honest.

Interesting article on how Xbox has played its user base.

https://www.kotaku.com.au/2024/01/xbox-is-not-your-friend/

@lacerz I don't think people actually think Microsoft (or any corporation) is "your friend". Just because a company makes some consumer-centric moves or buddy-buddy speeches, it's still for the sole purpose of improving the business, not because it wants to be our friend.

I just don't think everyone subscribes to this idea that corporations are inherently nefarious like people seem to do these days.

Yes, money is the only reasons any business gets started - from a major corporation to a local mom & pop shop. And any effort to continue making that money will be made - from a major corporation to any mom & pop shop. Some are better than others at the "people" part of things, but not immune to reality.

There are certainly places in this world where everyone is equal (well, except the people in power of course). Where everyone is given housing. Everyone is given healthcare. Everyone is provided basic rights to life. By all means, look to those places if you wish to be treated equally to everyone else (well, except the people in power, of course).

You'll have to give up some luxuries, probably a couple of freedoms, too, but if any kind of luxury or certain personal rights isn't your thing, then, hey, have at it. There is nothing stopping you and I wish anyone who chooses that well. Just keep in mind that you are still a cog in some wheel somewhere, just a different kind of wheel.

@lacerz It's been easy to see to those that don't wear their green glasses. It makes me wince every time Spencer fronts an article and hearing grown men foaming at the mouth calling him 'Phil' like he's their friend and he actually cares about them lol. Very sad , but to be fair, it's been the layout of the land for a decade at least across all fronts.
Whatever happened to just enjoying games for what they are?

@Techno92LFC

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I bet you any game in development will change 0% without these employees. Half the people being laid off are fluff management roles and not videogame development related at all.

A 3 Trillion valuation is very high, but not indicative of a company's profits.

That being said, it's a bad look for this news to coincide with layoffs. Whether intentional or not.

Corporations really are taking advantage of anyone who isn't rich.

@lacerz
Agree with it or not, its certainly a passionate and well written piece. Its clearly also well over stated. But well worth the read.

Its nice to see though, that many of the things I think I see going on from MS,are noticed by others. Its easy to think no one else is noticing. Whether you choose to see it as cynical manipulation and loathsome, or the clever use of tools available to achieve their buisness aims, is a matter of perspective.

@dreadful Right, plus the whole ABK customer service because Microsoft already has one and it's quite good, in my experience. Developers and IPs is what Microsoft wanted. It's weird to expect them to keep duplicated or unnecessary roles after acquiring one of the biggest and most bloated publishers in the world.

I don't remember so much outrage and grief when Sony and Embracer shut studios down recently or about the reported crunch culture at some studios like Naughty Dog or the "culture of punishment" reported by developers of the Spanish studio that made Metroid Dread for Nintendo. However, every few weeks you can read about the cancellation of Scalebound, the closure of Lionhead or exclusivity deals from a decade ago. Example, posted today on this site: "Guess you missed the 360 days where GTA IV's DLC was exclusive to 360 for ages before it appeared on PS3. MS are just as guilty as Sony."

It's quite obvious on this site and the other two that whenever bad news are related to Microsoft, non-Microsoft fans tend to blow the consequences out of proportion but that's okay, there is at least an argument to use. However, whenever good news are related to Microsoft, the same people downplay and disregard them and that's suspicious and make them lose credibility. It's not just about good or bad news, but also if they are related to Microsoft, Sony or Nintendo. That doesn't mean that there aren't people genuinely sad about this, but not all that have posted really are or, even worse, would be if another company did the same. I wonder why Microsoft is the most hated when they are the most consumer-friendly or is it just that Sony and Nintendo fans are the most vocal?

Layoffs are nothing to be happy about unless they are deserved, but I think that we all are old enough to understand that this was expected and that ABK was on sale for many reasons. The people made redundant are not developers, so sadly they are not needed because Microsoft already has those positions covered: customer service, marketing, e-sports, managers... Let's not forget that the developers haven't been fired and that they will be happier under Microsoft's management. Working conditions are more important than losing a job if you can find another, at least in my experience. In this case, most workers will benefit from the acquisition and the developers will keep their job and hopefully be able to work on IPs other than Call of Duty in a better environment.

@Kaloudz
Why don't they re-assign those people instead of firing them?
Surely there are other positions in the company.

I’m starting to really dislike the future vision of Xbox, and regret buying a Series X. I should have just spent more for a gaming PC or ROG Ally. It’s just failure after failure, and most of their recent game releases are bland and boring. All the talented developers and designers left years ago. They have a console for someone like me and it’s the Xbox 360.

;p
Firing "all" employees, more like

@Kaloudz no, but the fired employees could do training in/for other areas of the company.

@Kienda best post I’ve read in a long time, brilliant, kudos to you and couldn’t agree more.

I can tell by the comments that a lot of people don’t understand what valuation means.

It’s also strange that people hate company bloat and mismanagement until layoffs happen. I suspect if these people were high earners with large houses and new expensive cars many would not feel so bad for them. And most didn’t before this news broke. A lot of this outrage is performative.

While it sucks when anyone loses a job but it is better for those people to reskill/update skillsets and apply to other companies (or reapply to MS later) than for MS to keep redundant or poor performing positions. I’d be shocked if they didn’t get a decent severance package which hopefully in conjunction with their own fiscal preparedness (emergency funds and savings and already living below their means) should float them until they get another job.

@GamingSince84 except the fact that with a valuation that high, they could keep all of those people and hire another 3,900 and still being making gang busters... Some people just don't know humanity 101

The executives have no problems bumping up their pay tho….. cause you know…. $50 million a year just isn’t enough

Crass timing.

It was a bad day for the Xbox PR team.

Don't worry people, I'm sure games will come out just fine when people are scared about losing their jobs. Don't expect workers to do their best when the fear of being fired is present.

The lack of empathy in this comment section and writers of this site is quite shocking. Guess the few executives writing in this site (because otherwise i don't get how can you agree, accept or understand this decision at all, mostly because you have higher chances of being part of the fired team than the other one) don't care about how important is to have a place with great morale.

The fact that they do this with only the teams that lack unions (which negotiating to form one were supposedly undergoing) makes it downright evil.

@Kaloudz
Tons of companies do on-the-job training.
A lot also pay for schooling!

@Kaloudz
Why not?
M$ is more than just Xbox.

@Kaloudz
Obviously, they'd be offered and trained in a position that they would want.

Why are you so against this?
Do you own stock options in M$?

@pandoodles And pay these several thousand people to do what? As a business owner myself, I understand the need to trim the fat to pad the bottom line.

But you don't have hundreds of billions in cash. Enough said, sit down big fella.

@stinkyx ever actually ask a shareholder? I'm a shareholder I disagree with the actions that were taken.