Could Microsoft’s Job Cuts Unlock Hidden Shareholder Value?

Linkedin-Learning

Microsoft has confirmed that it will be conducting performance-based job cuts, affecting less than 1% of its 228,000 employees. While the company has framed this as a necessary step to maintain a culture of high-performance talent, a closer look at where these cuts are directed could reveal opportunities for even greater efficiency and shareholder value. One potential target area? Senior management at LinkedIn Learning.

Originally acquired through LinkedIn’s purchase of Lynda.com in 2015, LinkedIn Learning has become a valuable asset for Microsoft. However, the division’s senior management—many of whom came over from the acquisition—appear to have settled into a comfortable, unproductive rhythm. Reports suggest that these managers enjoy perks such as lavish meals and workplace indulgences while underperforming relative to the freelance creators who drive the platform’s success. This dynamic raises questions about whether LinkedIn Learning’s leadership aligns with Microsoft’s performance-driven ethos.

These job cuts are part of a broader trend for Microsoft, which has made significant workforce adjustments in recent years. In early 2023, the company laid off 10,000 employees and consolidated office leases. After acquiring Activision Blizzard for $75.4 billion in 2024, Microsoft cut 1,900 jobs in its gaming unit to reduce redundancies. Now, as the company faces competition in AI and grapples with a complex relationship with OpenAI—its $13 billion investment partner—streamlining inefficiencies in legacy acquisitions like LinkedIn could help Microsoft unlock hidden value.

While LinkedIn Learning’s content has gained traction with businesses and professionals, its leadership remains a stark contrast to the freelancers producing the courses. These contractors consistently deliver high-quality content, propelling the platform’s growth and relevance. By reassessing the division’s leadership and removing legacy managers who have grown complacent, Microsoft could redirect resources to the innovators who contribute the most—or to emerging technologies in AI and cloud learning solutions.

Microsoft shareholders, who already expect operational excellence, have reason to demand accountability in areas where inefficiencies persist. As CEO Satya Nadella emphasizes a high-performance culture, addressing the misaligned priorities at LinkedIn Learning’s leadership level would reinforce this commitment.

With a net income margin near 38%—close to its historical highs—Microsoft has the opportunity to refine its operations further. Cutting complacency at LinkedIn Learning is not just about trimming costs; it’s about aligning every part of the organization with the company’s core values of innovation, meritocracy, and shareholder value.

Microsoft has faced criticism in the past for its excessive spending, particularly during periods of bloated expenses that failed to translate into shareholder value. Notably, in the early 2000s, Microsoft was forced to announce its first-ever dividend as pressure mounted from investors tired of the company hoarding cash without adequate returns. While Microsoft has since grown into a dividend-paying giant, its yield remains far below the levels seen during those transformative years. It’s time for the company to return to dividend yields above 6%, sending a clear signal that shareholder interests take precedence over unchecked spending. Reducing inefficiencies—like the excessive perks and underperformance seen at LinkedIn Learning—would help curb money down the drain and free up capital for meaningful returns to investors who have fueled Microsoft’s rise to prominence.

Microsoft’s job cuts may seem minor in scale, but they could set the stage for significant long-term gains—if targeted at the right areas. As investors watch closely, the company’s willingness to tackle legacy inefficiencies could shape its future growth and resilience.