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Microsoft Layoffs Don't Change Our Valuation of the Stock

The majority of the layoffs stem from redundancies following the Nokia acquisition while Microsoft looks to streamline operations, but we expect additional details in the firm's fourth-quarter earnings call next week.

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 Microsoft (MSFT) announced Thursday that approximately 18,000 employees will be laid off during the next year, with the vast majority of the layoffs coming from redundancies created from the recent  Nokia (NOK) acquisition. The remainder of the layoffs will be at Microsoft, in an effort to streamline the organization and quicken the pace of development and innovation. These are important changes, in our view. 

Although the layoffs were widely telegraphed, we were surprised by the timing, as we expected the company to make this announcement during its fourth-quarter earnings call next Tuesday. We expect additional details next week, and are not changing our fair value estimate and wide moat rating at this time.

Norman Young does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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