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Microsoft: Job cuts in tech sector spread, Microsoft lays off 10,000

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Microsoft is laying off 10,000 employees, or nearly 5% of its workforce, joining other tech companies in slowing their pandemic-era expansions.

In a filing with the government on Wednesday, the company said that the layoffs were caused by “macroeconomic conditions and changing customer priorities.”

The software company, which is based in Redmond, Washington, also said that it was making changes to its hardware portfolio and combining its leased office locations.

With so many people working and studying from home, Microsoft is cutting far fewer jobs than it added during the COVID-19 pandemic as it responds to a surge in demand for its workplace software and cloud computing services.

“A large part of this is simply overeager hiring,” said Joshua White, a finance professor at Vanderbilt University.

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Microsoft’s Staff Grew By 36%

In the two fiscal years after the outbreak, Microsoft’s staff grew by 36%, from 163,000 at the end of June 2020 to 221,000 in June 2022.

In an email to employees, CEO Satya Nadella said that the layoffs will affect “less than 5% of our total employee base,” and that some employees will find out today.

Nadella said, “We are cutting jobs in some areas, but we will keep hiring in key strategic areas.” He stressed how important it was to create a “new computer platform” based on advances in artificial intelligence.

Customers who increased their digital technology spending during the pandemic are now attempting to “optimize their digital spend to do more with less,” he said.

“We’re also seeing organizations in every industry and geography exercise caution as some parts of the world experience a recession and others anticipate one,” Nadella wrote.

Lots Of Cuts In The Tech Sector

Other tech firms have also cut jobs amid concerns about an economic slowdown.

Amazon and the company that makes business software, Salesforce, both cut a lot of jobs earlier this month. They did this to cut back on payrolls that grew quickly during the pandemic lockdown.

Amazon has announced the elimination of approximately 18,000 jobs. The layoffs are the largest in the Seattle company’s history, though they represent only a small portion of its 1.5 million global workforces.

Meta, Facebook’s parent company, is laying off 11,000 employees, or roughly 13% of its workforce. And Elon Musk, the new CEO of Twitter, has reduced the company’s workforce.

When Nadella spoke at the World Economic Forum’s annual meeting in Davos, Switzerland, on Wednesday, he did not directly mention the layoffs.

microsoft

Finding A Balance After Covid

When the forum’s founder, Klaus Schwab, asked what the tech layoffs meant for the industry’s business model, Nadella stated that companies that boomed during the COVID-19 pandemic are now seeing “normalization” of that demand.

“Quite frankly, we in the technology industry will have to become more efficient, right?” According to Nadella. “It’s not about doing more with less than everyone else. We’ll have to make do with less. So we’ll have to demonstrate our productivity gains using our technology.”

Microsoft refused to comment on where the layoffs and office closures would be concentrated. On Wednesday, the company told employment officials in Washington state that it was firing 878 people from its offices in Redmond and the nearby cities of Bellevue and Issaquah.

It employed 122,000 people in the United States and 99,000 elsewhere as of June.

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A Rapid Rise In Interest Rates

According to Vanderbilt professor White, all industries are looking to cut costs ahead of a possible recession, but tech companies may be especially sensitive to the rapid rise in interest rates, a tool that the Federal Reserve has used aggressively in recent months in its fight against inflation.

“This hits tech companies a little harder than industrials or consumer staples because a large portion of Microsoft’s value is on projects with cash flows that won’t pay off for several years,” he explained.

One of these projects is Microsoft’s recent investment in its startup partner in San Francisco, OpenAI, which makes the writing tool ChatGPT and other AI systems that can make readable text, images, and computer code.

Microsoft, which owns the Xbox game division, is also dealing with regulatory uncertainty in the United States and Europe, delaying its planned $68.7 billion takeover of video game company Activision Blizzard, which had approximately 9,800 employees a year ago.

SOURCE – (AP)

 

Business

AI Chip Firm Nvidia Valued At $2tn

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Nvidia’s market value has reached $2 trillion (£1.58 trillion), marking a new milestone in the chipmaker’s meteoric rise to the ranks of the world’s most valuable corporations.

Shares of the Silicon Valley corporation gained more than 4% in opening trading on Friday before falling slightly.

The gains built on the company’s impressive earnings announcement earlier this week.

nvidia

AI Chip Firm Nvidia Valued At $2tn

The company is profiting from improvements in artificial intelligence (AI), which has boosted demand for its processors.

The company’s turnover doubled last year to more than $60 billion, and CEO Jensen Huang told investors this week that demand was “surging” worldwide.

The corporation, which became worth $1 trillion less than a year ago, is now the world’s fourth most valuable publicly traded company, trailing Microsoft, Apple, and Saudi Aramco.

nvidia

AI Chip Firm Nvidia Valued At $2tn

After shares fell from their early Friday highs, the company’s market capitalization ended the day just under $2 trillion.

Nvidia was founded in 1993 and was originally recognized for producing computer processors that processed images, primarily for computer games.

Long before the AI revolution, it began adding capabilities to its chips that it claims to aid in machine learning, which has helped it acquire market dominance.

It is currently regarded as a vital company to monitor how quickly AI-powered technology spreads throughout the commercial world.

The firm’s stock price has more than tripled the previous year, from less than $240 per share to about $800 in midday trading on Friday.

On Thursday, the day after its earnings release, purchasers snapped up shares, boosting its value by $277 billion, the greatest one-day rise in Wall Street history.

He research has also contributed to a larger market rise, appearing to persuade investors that, as Derren Nathan of Hargreaves Lansdown put it, the AI boom is “living up to the hype”.

nvidia

AI Chip Firm Nvidia Valued At $2tn

“It’s being used in automotive for design, in telecommunications for network planning, and in mainstream companies to figure out and get insights into data that they haven’t been able to get before,” Bob
O’Donnell, a technology analyst based in the United States, told the BBC earlier this week.

“This is now really starting to hit the kinds of companies across the board, not just specialized tech companies and that’s a real tipping point for the industry.”

SOURCE – (BBC)

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Walmart To Acquire Smart TV Maker Vizio For $2.3 Billion In Bid To Boost Its Advertising Business

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Walmart is paying $2.3 billion for smart TV maker Vizio to boost its quickly growing advertising business and compete with Amazon.

If the purchase is completed, Walmart will gain access to Vizio’s SmartCast operating system, allowing the retail juggernaut to offer its suppliers the opportunity to display adverts on streaming devices.

Walmart Connect, which provides marketers with access to Walmart’s large consumer base, has helped the company grow its media and advertising business. Walmart reported on Tuesday that its global advertising business increased by nearly 28% to $3.4 billion last year.

The developments follow Amazon’s announcement last month that it will begin charging Prime members $2.99 per month to keep their films and TV series ad-free, in addition to the $14.99 per month or $139 per year Prime price.

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What does Walmart stand to gain from a television manufacturer?

Vizio’s SmartCast technology has 18 million active accounts and has increased 400% since 2018. The firms claim that Vizio’s platform has over 500 direct advertisers and that ads now account for most of the company’s gross profit.

In recent years, makers of streaming gear, such as Roku and Vizio, have moved their focus to advertising revenue. Vizio established its Vizio Ads business unit in 2019, claiming to be “one of the few connected TV companies with the device penetration, consumer opt-in, and infrastructure to deliver meaningful scale.”

Walmart saw Vizio’s growing consumer base and grabbed the opportunity to develop its Walmart Connect business.

“We believe the combination of these two businesses would be impactful as we redefine the intersection of retail and entertainment,” said Seth Dallaire, executive vice president and chief revenue officer at Walmart U.S.

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Who else is ramping up screen advertising?

Other large streamers, such as Netflix and Disney, have embraced the dual model, allowing them to generate revenue from commercials while simultaneously allowing customers to opt-out for a higher charge.

However, in the ever-changing streaming industry, whether consumers are prepared to pay more to see fewer commercials when they already pay subscription fees, frequently for numerous providers, remains to be seen. Many consumers “cut the cord” and ditched cable TV because they were frustrated with their ever-increasing fees.

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How did the companies’ shares fare?

Vizio stock rose about 15% in the afternoon, reaching $10.96 per share.

Walmart’s stock jumped 3.1% to $175.66 per share after exceeding Wall Street’s expectations with its sales and profit on Tuesday.

Roku, one of Vizio’s primary competitors, saw its stock drop 6.4% by midday.

SOURCE – (AP)

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Samsung Chief Lee Jae-Yong Is Acquitted Of Financial Crimes Related To 2015 Merger

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SEOUL, South Korea — On Monday, a South Korean court convicted Samsung Electronics Chairman Lee Jae-yong of financial crimes related to a disputed merger of Samsung affiliates in 2015, strengthening his control of South Korea’s largest corporation.

The Seoul Central District Court’s decision may relieve the legal issues surrounding the Samsung heir, less than two years after he was pardoned for bribery in a corruption scandal that helped collapse a previous South Korean government.

The court ruled that the prosecution did not provide sufficient evidence that the merger of Samsung C&T and Cheil Industries was illegally carried out to strengthen Lee’s influence over Samsung Electronics.

Samsung's chief is is acquitted of financial crimes related to 2015 merger  : NPR

Samsung Chief Lee Jae-Yong Is Acquitted Of Financial Crimes Related To 2015 Merger

Activists, progressive lawmakers, and observers questioned how Lee could be acquitted of all counts since he had previously been convicted of bribing a prior president to gain official support for the merger. The People’s Solidarity for Participatory Democracy, South Korea’s largest civic group, claimed that the court failed to demonstrate “even a minimal level of social justice” by prioritising Lee’s interests over those of shareholders and pensioners, whose retirement funds could be reduced by the deal, which the National Pension Service approved.

It portrayed the decision as a blow to years of efforts to alter the management culture of South Korea’s family-owned conglomerates and their close ties to the government. South Korean corporate leaders face lenient sentences for corruption, business irregularities, and other crimes, with judges frequently citing concerns about the country’s economy.

Lee was charged with stock price manipulation and accounting fraud, and prosecutors demanded a five-year prison sentence. It wasn’t immediately apparent if they will appeal. Lee denied misconduct in the current case, referring to the 2015 merger as “normal business activity.”

Lee, 55, declined to answer reporters’ questions as he left the court. Lee’s lawyer, You Jin Kim, applauded the verdict, saying it proved the merger’s legality.

S. Korean court acquits Samsung chief over 2015 merger case

Samsung Chief Lee Jae-Yong Is Acquitted Of Financial Crimes Related To 2015 Merger

Lee, a third-generation business heir officially appointed chairman of Samsung Electronics in October 2022, has overseen the Samsung group of companies since 2014, when his father, former chairman Lee Kun-hee, died following a heart attack.

Lee Jae-yong spent 18 months in prison after being convicted in 2017 on unrelated bribery charges linked to the 2015 transaction. He was originally sentenced to five years in prison for offering 8.6 billion won ($6.4 million) in bribes to then-President Park Geun-hye and a close confidante to secure government approval for the 2015 merger, which was critical to strengthening his control over the Samsung business empire and establishing a father-to-son leadership succession.

Park and her confidante were both convicted in the scandal, and outraged South Koreans organised months-long rallies demanding an end to dubious business-political links. The demonstrations eventually resulted in Park’s removal from office.

Lee was released on parole in 2021 and pardoned by South Korean President Yoon Suk Yeol in August 2022, continuing a pattern of leniency towards big white-collar crime in South Korea and preferential treatment for convicted tycoons.

Some shareholders opposed the 2015 merger, claiming it unjustly enriched the Lee family while harming smaller stockholders.

There was also widespread outrage over how the national pension fund’s investment in Samsung C&T, the merged business, plummeted by an estimated hundreds of millions of dollars after Park persuaded the National Pension Service to approve the merger.

Prosecutors claim that Lee and other Samsung officials harmed shareholders of Samsung C&T, a major construction company, by manipulating corporate assets to engineer a merger that benefited Cheil, an amusement park and clothing company in which Lee was the majority shareholder.

Prosecutors also said that Samsung executives used accounting fraud to boost the value of Samsung Biologics, a Cheil subsidiary, by more than 4 trillion won ($3 billion), making the transaction appear fair. The court said that the prosecution’s evidence was insufficient to demonstrate that the 2015 merger was carried out illegally or solely to bolster Lee’s influence over Samsung Electronics and that broader commercial factors were likely involved. The court said it was unclear whether the deal’s terms harmed shareholders’ interests adversely, and prosecutors failed to prove that Samsung officials committed accounting fraud. When Lee ran Samsung Electronics from behind bars, relaying his choices through visiting company executives, there was no visible sign of business problems. Nonetheless, South Korean business organisations, like the Korea Chamber of Commerce and Industry, hailed Lee’s acquittal, claiming that prolonging Lee’s legal issues would have harmed Samsung’s speed and decisiveness as it faces increased competition in semiconductors and other areas.

Oh Se Hyung, an official of the Citizens’ Coalition for Economic Fairness, described the verdict as a “collapse in economic and judicial justice.”

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Samsung Chief Lee Jae-Yong Is Acquitted Of Financial Crimes Related To 2015 Merger

“It’s tragic that a wrongful merger and clear accounting irregularities were ruled as not guilty, and you have to question the roles played by the prosecution and the judiciary that led to this,” the attorney general said.

Lee has been navigating one of his most difficult periods as the CEO of one of the world’s major computer chip and smartphone manufacturers, with Russia’s war on Ukraine and other geopolitical instability harming the global economy and deflating technology expenditure.

The business reported a 34% drop in operating profit for the October-December quarter last week, as slowing demand for its TVs and other consumer electronics products offset hard-earned profits from a slowly improving memory chip market.

SOURCE – (AP)

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