The tech industry is undergoing a round of layoffs. Microsoft (MSFT) has confirmed it will be introducing a workforce reduction, and Alphabet’s Google (GOOG, GOOGL) is reportedly looking to follow suit.

Yahoo Finance’s Dan Howley explains the motive for the job cuts despite strong balance sheets.

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This post was written by Angel Smith

Video Transcript

Microsoft announcing job cuts this week.

The tech giant, not the only one Google also reportedly cutting back on staff over 1000 people are expected to be impacted.

So why are these tech giants allegedly laying off workers despite strong balance sheets to break this down for us?

We got Yahoo Finance’s very own.

Dan Howley here with us, Dan.

What’s going on with the layoff news?

Yeah, man, some of the uh the layoffs from Microsoft have to do with its uh kind of mixed reality unit that really suffered heavy losses uh previously.

And now they, they seem to be kind of continuing to, to move folks out of that.

Uh They’re still continuing to offer their hollow lines too.

That’s their mixed reality headset.

Uh They have that uh contract with the government, so they’re continuing to, to offer that.

But uh some of these layoffs have to do with uh the cloud unit, whether that’s uh sales.

Uh They say it’s uh according to these reports about strategic alignment and ditto uh that for, for Google, which is also seeing layoffs in that unit.

Uh Basically saying this is all about uh strategic alignment now they are continuing to pump both companies continuing to pump billions of dollars into their cloud services as they build out their generative A I offerings and their ability to host generative A I capabilities.

So it’s not as though they’re pulling back on spending in those places, the, the cloud unit, it’s just that they seem to be wanting to move money around to, to different opportunities.

And so that looks to be where, where they’re at at this point, uh, you know, both companies as well as obviously met at Amazon had huge layoffs in prior years as a result of over hiring from the pandemic.

Um, it doesn’t sound like this is, uh, uh, something along those lines where they had simply too many employees and now they have to shed them because they didn’t, you know, predict what would happen after the pandemic very well.

Uh, this seems to be more of a, an, uh, just generalized issue where they’re trying to kind of move bodies around and move money around, uh, to, to fill in gaps elsewhere.

All right, Dan, we’re gonna have to leave it there but appreciate you joining us as always on all things.

Tech.