April is shaping up to be yet another brutal month for job cuts in the technology sector. But the announcements may not have the immediate effect that many companies are hoping for. Here’s the latest on the situation.
Microsoft to offer buyouts to 7% of its US workforce
While Microsoft hasn’t announced another round of layoffs, the Windows giant is planning job reductions of another kind.
As Fast Company reported yesterday, the Redmond, Washington, company is expected to offer buyouts to 7% of its U.S. workforce by the end of June. A buyout is when a company offers an employee a financial incentive to resign.
Buyout helps companies avoid being forced to choose which employees to let go, while still reducing their workforce and achieving their goal of lowering operational costs.
An employee who accepts the buyout loses their job, but generally gets a significant financial incentive for the voluntary move. Buyouts typically target employees who are closer to retirement age.
As for the reason for the buyouts, it’s the same reason driving most of the tech industry’s recent layoffs: the drive to cut labor costs so more money can be spent on building out the huge data centers needed for AI training and services.
Meta to lay off 10% of its workforce
While Microsoft is giving some of its employees the option of voluntary buyouts, Meta isn’t providing its employees an option at all.
Yesterday, the company told its employees that it will lay off about 8,000 of them—roughly 10% of its workforce—on May 20. An additional 6,000 currently open roles will not be filled.
Meta’s latest layoff comes after the company has committed $135 billion in capital expenditure to its latest round of AI initiatives.
Much of that expenditure will go to building massive data centers that the company needs to run its AI systems. As Fast Company reported yesterday, Meta says the job cuts aim to boost efficiency while also offsetting its “heavy spending on artificial intelligence.”
Nike announces 1,400 tech job layoffs
Also yesterday, shoe giant Nike announced it was laying off around 2% of its workforce, or about 1,400 employees. While the company is primarily known as a maker of apparel and footwear, the job cuts will mostly hit Nike’s technology roles.
But while Nike’s job cuts will primarily target its tech workforce, the company is one of the few to not suggest that AI is behind the layoffs.
Instead, Nike says the job cuts are part of its “Win Now” strategy, which aims to modernize its manufacturing, merge parts of its supply chain, and reshape its technology division.
Nike’s layoffs will reportedly impact employees globally, including in North America.
Snap to lay off 16% of its global workforce
The trifecta of tech job cuts announced yesterday aren’t the only ones in April.
On April 14, Snapchat maker Snap Inc. announced it would cut 16% of its global workforce. As CNBC reported, that equates to about 1,000 jobs, while another 300 currently empty roles will remain unfilled.
The primary driver behind the job cuts is the desire to cut costs by leveraging AI instead of a human workforce.
“We believe that rapid advancements in artificial intelligence enable our teams to reduce repetitive work, increase velocity, and better support our community, partners, and advertisers,” CEO Evan Spiegel wrote in a letter announcing the job cuts.
GoPro to reduce its workforce by 23%
Finally, earlier this month, on April 7, wearable camera maker GoPro announced that it planned to lay off 145 workers. But while that may seem small in comparison to the other companies on this list, it represents a staggering 23% of the company’s workforce.
According to the Wall Street Journal, GoPro’s job cuts come as the company struggles with profitability amid macroeconomic pressures, including increased memory costs as AI demand drives prices higher and tariffs add costs.
The company reportedly hopes to reduce operating costs in order to help it return to profitability by the end of the year.
Company stock prices react to layoffs
While layoffs are devastating to the affected workers and their families, investors usually cheer the news of job cuts.
That’s because reducing the workforce is usually the fastest way for a company to cut costs. It’s why share prices tend to increase after a company announces major job cuts.
But this time, investor response has been a mixed bag.
Since GoPro, Inc. (Nasdaq: GPRO) announced its job cuts, the stock has climbed an impressive 73%.
Likewise, Snap Inc. (NYSE: SNAP) stock rose immediately after it announced its job cuts. After the announcement, SNAP stock was up about 7%. However, as of yesterday’s close, the stock had given back some of those gains, now up only about 4.3% since the layoffs were announced.
But the other companies’ stock prices have hardly reacted.
Shares in Meta Platforms Inc. (Nasdaq: META) fell more than 2% yesterday, and are barely up half a percent in premarket trading this morning, as of the time of this writing.
Shares in Microsoft Corporation (Nasdaq: MSFT) fell nearly 4% yesterday and are up only about 1.3% in premarket trading today.
Nike Inc (NYSE: NKE) shares fell nearly 2% yesterday and haven’t even recovered half of that this morning.
In other words, announcing major job cuts no longer seems guaranteed to get investors excited about a stock—and that’s something the tech giants are likely taking note of this morning.
