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Microsoft lays off about 3% of its workforce in what one executive calls a “day with a lot of tears”
Microsoft (MSFT: NASDAQ)
Source Google
Microsoft began laying off about 6,000 workers Tuesday, nearly 3% of its entire workforce and its largest job cuts in more than two years as the company spends heavily on artificial intelligence. Hard hit was the tech giant’s home state of Washington, where Microsoft informed state officials it was cutting 1,985 workers tied to its Redmond headquarters, many of them in software engineering and product management roles.
Microsoft said the layoffs will be across all levels, teams and geographies but the cuts will focus on reducing the number of managers. Notices to employees began going out on Tuesday.
The mass layoffs come just weeks after Microsoft reported strong sales and profits that beat Wall Street expectations for the January-March quarter, which investors took as a dose of relief during a turbulent time for the tech sector and U.S. economy.
“I think many people have this conception of layoffs as something that struggling companies have to do to save themselves, which is one reason for layoffs but it’s not the only reason,” said Daniel Zhao, lead economist at workplace reviews site Glassdoor. “Big tech companies have trimmed their workforces as they rearrange their strategies and pull back from the more aggressive hiring that they did during the early post-pandemic years.”
Microsoft employed 228,000 full-time workers as of last June, the last time it reported its annual headcount. About 55% of those workers were in the U.S. Microsoft announced a smaller round of performance-based layoffs in January. But the 3% cuts will be Microsoft’s biggest since early 2023, when the company cut 10,000 workers, almost 5% of its workforce, joining other tech companies that were scaling back their pandemic-era expansions.
Microsoft’s chief financial officer, Amy Hood, said on an April earnings call that the company was focused on “building high-performing teams and increasing our agility by reducing layers with fewer managers.” She also said the headcount in March was 2% higher than a year earlier, and down slightly compared to the end of last year.
The layoffs are hitting all parts of Microsoft’s business, including the video game platform Xbox and the career networking site LinkedIn. Some laid-off workers and the executives who made the cuts took to LinkedIn to talk about them.
“This is the first time I’ve had to lay people off to support business goals that aren’t my own,” wrote Scott Hanselman, a vice president of Microsoft’s developer community. “I often have trouble separating my beliefs with the system that I participate in and am complicit in. These are people with dreams and rent and I love them and I want them to be OK.” He added: “This is a day with a lot of tears.”
The company didn’t give a specific reason for the layoffs, only that they were part of “organizational changes necessary to best position the company for success in a dynamic marketplace.”
Microsoft has said it has been spending $80 billion in the fiscal year that ends in June on building data centers and other infrastructure it needs to develop its artificial intelligence technology, though it has also scaled back some of those projects. Those AI tools have been pitched as changing the way people work, including in Microsoft’s own workplaces.
Microsoft CEO Satya Nadella told Meta CEO Mark Zuckerberg at an AI event last month at Meta’s headquarters that “maybe 20, 30% of the code” for some of Microsoft’s coding projects “are probably all written by software.”
Even if AI is increasingly helping Microsoft software engineers, however, doesn’t necessarily mean it’s a chief reason for laying them off. “When these big tech companies say that they’re trimming management layers, that doesn’t really sound like it’s being driven by AI,” Zhao said. “You’re not expecting ChatGPT to replace the manager.”
Instead, cutting management ranks can often reflect a broader strategy. “As companies grow quickly, you need to add managers who can coordinate across teams or within teams,” Zhao said. “But it’s not until things start to slow down that people start asking questions about how necessary those roles are.”
Of the laid-off employees in Washington, about 1,500 worked in person at Microsoft’s offices and 475 worked remotely, according to the notice the company sent to the state employment agency. Their official last day will be in July.
After hiring sprees that started when the COVID-19 pandemic spiked demand for online services, many tech companies are still in a process of “coming back to Earth and trying to kind of rebalance some things,” said Cory Stahle, an economist at Indeed, the job listings website.
And while Microsoft isn’t as directly affected by President Donald Trump’s wide-ranging tariffs as some of its peers, it must also think more broadly about economic conditions that could play out over the coming months and years.
“This could be an effort to think more long term,” Stahle said. “If you have to go out and buy groceries and spend more on groceries and produce that are more expensive due to tariffs, you maybe don’t have as much discretionary income to spend on electronics or video game systems.”
Honda delays $15-billion EV project citing demand, shifts some CR-V output to U.S.
Honda (HMC: NYSE)
Source Google
Honda has postponed a $15-billion electric vehicle project in Ontario, citing market demand, and is shifting some production of its popular CR-V model intended for the U.S. market to its Ohio plant because of tariffs. The halted investment marks by far the biggest project delay yet in Canada as the outlook for EV growth softens.
In a quarterly earnings press conference on Tuesday in Japan, chief executive Toshihiro Mibe said the company will look at where the electric vehicle market is in two years before deciding whether to keep going with the project.
“What happens after two years and the starting time of the project, we have to observe what is happening and ultimately make the decision,” he said, based on translated remarks. While he cited EV demand for the delay, he said the company’s move to shift CR-V production to the U.S. is a more immediate result of tariffs.
Photo by The Canadian Press
“There is room to increase the production capacity in the United States, and we are trying to look into what will happen as a result of that,” said Mibe. “In the midterm, if the tariff measures are to be in place for a long time, then we will have to increase our production capacity in the United States.”
Honda was the second largest auto manufacturer in Canada last year based on the roughly 420,000 vehicles it produced, and the CR-V makes up close to half that total.
But Honda Canada spokesman Ken Chiu said the company has no plans to cut overall production or jobs in Canada, and that the company is instead shifting which vehicles go where based on tariffs.
“We’re basically swapping export destinations of a small portion of CRVs between our plants,” he said by email. He said the decision to postpone the EV project, which would include a battery plant, a retooled assembly line, and two other plants, has no impact on the current 4,200 people who currently work at the Honda manufacturing plant in Alliston, Ont.
The decision comes even as EV sales do keep growing, and taking more market share. In Canada, zero-emission vehicles, which includes hybrids, made up 15.4% of sales last year, up from 10.7% a year earlier. Fully electric vehicles made up 11.4% of sales. In the U.S., EV sales were up 7.3% for 2024 from a year earlier and made up 8.1% of total sales, according to Cox Automotive. It expects one in every four vehicles sold this year will likely be electrified in some way.
But while growing, demand hasn’t matched some of the expectations that led to more than $46 billion in spending commitments in Canada since late 2020. The added costs and uncertainty of tariffs imposed by U.S. President Donald Trump, as well as his efforts to dismantle funding and support for EV adoption in the U.S., add to the challenges. Industry pressures have seen numerous automakers pull back on EV plans, even before Trump was elected.
Last year, Ford Motor Co. delayed production of an electric SUV at its Oakville, Ont., plant and Umicore said it had halted spending on a $2.8-billion battery materials plant in eastern Ontario.
The future of Northvolt’s battery project in Quebec is also unclear after the parent company declared bankruptcy in Sweden in March. And just last month, GM temporarily laid off hundreds of workers at its Ingersoll, Ont., plant that produces an electric delivery vehicle because it isn’t selling as well as it hoped.
Honda’s decision, affecting plans that were expected to create 1,000 jobs, came as it reported a drop in profits and more on the way because of tariffs. The company said Trump’s tariffs are expected to cut USD$4.4 billion from its operating profit for this fiscal year, largely because it has so many vehicles coming from Canada and Mexico into the U.S.
Ontario Premier Doug Ford said Honda assured him it’s still committed to the EV project.
“I’ve talked to Honda, they’ve promised us they’re going to continue on with their expansion,” said Ford at an event in Pickering, Ont. He said he was confident Prime Minister Mark Carney could reach a trade deal with Trump to create a mutually rewarding relationship that’s been growing since the first auto pact some sixty years ago.
The pullback in EV development shows the widening pressures of tariffs, said Flavio Volpe, head of the Automotive Parts Manufacturers’ Association. He said Honda’s commitment last year had represented a massive vote of confidence in the Canadian supply base that he hopes it will see through. “We hope to find a solution for Canada that restores confidence for ambitious projects. All Canadian auto has benefited greatly for 40 years by Honda’s continued commitment,” said Volpe.
The project was first announced in April 2024 at an event that included then-prime minister Justin Trudeau and Ontario Premier Doug Ford and was to receive support from the federal and Ontario governments totalling about $5 billion.
While some EV projects have stumbled in Canada, other companies are pushing ahead. A joint venture between Stellantis and LG is nearing completion of a battery plant in Windsor, Ont., and Volkswagen’s PowerCo. is still building its big Gigafactory in St. Thomas, Ont., with initial production expected in 2027. The company notes though that once complete, the plant will follow a demand-based ramp up in commercial production.
CAE stands to grow with global upswing in military spending, CEO says
CAE Inc. (CAE: TSE)
Source Google
Flight simulator maker CAE Inc. stands to grow with a global upswing in military spending, chief executive Marc Parent said as the company reported its latest quarterly results. Parent pointed to increasing defence budgets across NATO and allied countries, including a notably stronger commitment from Canada.
“Increasing defence budgets are driving demand for the advanced training and simulation solutions where CAE has a clear competitive differentiation,” Parent told a conference call with financial analysts on Wednesday. The increase in military spending comes as U.S. President Donald Trump casts doubt on the future of the NATO military alliance. Prime Minister Mark Carney has pledged to increase Canada’s defence spending to the two per cent NATO target by 2030. The European Commission has also unveiled a plan to provide loans and allow member states to take on more debt to spend on defence, without triggering the restrictions the EU imposes on members with excessive deficits.
“Any capability that they deploy, whether it’s new aircraft, it’s new helicopters, it’s new ships, it’s new submarines, all that is going to require very significant and realistic training. So as Canada’s strategic partner, you know, I think we were going to continue to do very well in that market,” Parent said.
CAE was named in February a strategic partner to work with the Royal Canadian Air Force to design and co-develop the Future Fighter Lead-in Training program, which will prepare and train pilots to operate Canada’s advanced fighters.
In May 2024, CAE announced that SkyAlyne, its joint venture with KF Aerospace, won a $11.2-billion, 25-year contract for Canada’s Future Aircrew Training Program.
After the close of trading Tuesday, CAE reported a fourth-quarter profit attributable to equity holders of $135.9 million or $0.42 per share for the quarter ended March 31. The result compared with a loss of $504.7 million or $1.58 per share in the same quarter last year. On an adjusted basis, CAE says it earned $0.47 per share in its latest quarter compared with an adjusted profit of $0.12 per share a year earlier. Revenue for the quarter totalled $1.28 billion, up from $1.13 billion.
The increase came as civil aviation revenue amounted to $728.4 million, up from $700.8 million a year earlier, while defence and security revenue totalled $547 million, up from $425.5 million.
CAE shares were down $2.36, or more than six per cent, at $33.81 in mid-morning trading on the Toronto Stock Exchange.
BMO Capital Markets analyst Fadi Chamoun said CAE’s civil performance was modestly below expectations in the fourth quarter, but more than offset by defence. “Ongoing aircraft delivery delays are slowing the pace of initial pilots training, particularly in the U.S., and weighing on training utilization rates and civil segment near-term outlook,” Chamoun wrote in a report to clients.
In its outlook, CAE says it expects its civil adjusted segment operating income to grow in the mid- to high-single-digit percentage range in its 2026 financial year, while its defence division is expected to post low-double-digit percentage growth.
National Bank analyst Cameron Doerksen said the civil forecast was “modestly below expectations” but that he saw some of the headwinds for pilot training demand growth as largely temporary. “We remain confident in the multi-year growth story for CAE,” he wrote in a report.
A rare warning from Walmart during a US trade war: Higher prices are inevitable
Walmart Inc. (WMT: NYSE)
Source Google
Walmart, which became the U.S’s largest retailer by making low prices a priority, has found itself in a place it’s rarely been: Warning customers that prices will rise for goods ranging from bananas to car seats.
Executives at the USD$750 billion company told industry analysts Thursday that they are doing everything in their power to absorb the higher costs from tariffs ordered by President Donald Trump. (All figures in this section are in U.S. currency.)
Given the magnitude of the duties, however, the highest since the 1930s, higher prices are unavoidable and they will hurt Walmart customers already buffeted by inflation over the past three years.
AP Photo
Trump’s threatened 145% import taxes on Chinese goods were reduced to 30% in a deal announced Monday, with some of the higher tariffs on pause for 90 days. Those higher prices began to appear on Walmart shelves in late April and accelerated this month, Walmart executives said Thursday. However, a larger sting will be felt in June and July when the back-to-school shopping season goes into high gear.
“We’re wired to keep prices low, but there’s a limit to what we can bear, or any retailer for that matter,” Chief Financial Officer John David Rainey told The Associated Press on Thursday after the company reported strong first quarter sales.
Rainey emphasized that prices are rising not just for discretionary items such as patio furniture and trendy fashions, but for basic necessities as well. The price of bananas, imported from Costa Rica, rose from $0.50 per pound, to $0.54. He thinks car seats made in China that currently sell for $350 at Walmart will likely cost customers another $100. Baby strollers are also sourced from China, Rainey said. Higher prices arrive as many Americans pull back on spending as they grow increasingly uneasy about the economy.
Government data Thursday revealed slowing sales growth for retailers. Walmart says that its consumers have become cautious and selective. Tariffs on China and other countries are threatening the low-price model at the core of Walmart’s success.
Retailers and importers had largely halted shipments of shoes, clothes, toys, and other items due to new tariffs, but many are resuming imports from China in the narrow window that opened during the temporary “truce” this week, hoping to avoid sparse shelves this fall. Yet retailers, already operating on thin margins, say they have no choice but to raise prices to offset higher costs from tariffs. And they are also bracing for higher shipping costs fueled by a surge of companies scrambling to get their goods on ships to the U.S.
Rainey told The Associated Press that the retailer did not pause shipments from China as a result of the tariffs like others because it didn’t want to hurt its suppliers and wanted to keep merchandise flowing. It has built in hedges against some tariff threats. Two-thirds of Walmart’s merchandise is sourced in the U.S., with groceries now accounting for roughly 60% of Walmart’s U.S. business.
Still, Walmart isn’t immune.
CEO Doug McMillon told analysts Thursday that Walmart imports general merchandise from dozens of countries. But China, in particular, represents a big chunk of volume in certain categories like electronics and toys.
Tariffs on countries like Costa Rica, Peru and Colombia are raising costs on groceries like avocados, coffee and roses, in addition to bananas, company executives said. Walmart is absorbing costs on general merchandise within departments and has yet to pass along rising costs in some cases.
Walmart is also asking suppliers to swap input materials for components if possible, for example, using fiberglass instead of aluminum, which Trump hit with tariffs in early March.
“We’re very dependent upon imports for these types of products,” Rainey told The Associated Press.
He said there are some goods for which Walmart simply can’t shift production or produce easily in the United States. Walmart earned $4.45 billion, or $0.56 per share, in the quarter ended April 30, down from $5.10 billion, or $0.63 per share, in the same period last year.
Adjusted earnings per share were $0.61, exceeding the $0.58 cent projections from industry analysts, according to FactSet. Revenue rose 2.5% to $165.61 billion, just short of analyst estimates.
Walmart’s U.S. comparable sales—those from established physical stores and online channels—rose 4.5% in the second quarter, though that slowed from a 4.6% bump in the previous quarter, and a 5.3% increase in the third quarter of 2024.
Business was fuelled by health and wellness items as well as groceries. Sales were weaker in home and sporting goods, which was offset by robust sales of toys, automotive goods and kid’s clothing, the company said.
Global e-commerce sales rose 22%, up from 16% in the previous quarter. Walmart said it expects sales growth of 3.5% to 4.5% in the second quarter. Like many other U.S. companies, however, it did not issue a profit outlook for the quarter because of the chaotic environment, with stated U.S. tariff policies changing constantly.
The company maintained its full-year guidance issued in February.
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