Microsoft Eliminates Another 650 Positions at Xbox Gaming

Microsoft (MSFT) stock is down slightly in Thursday's session after a leaked internal memo revealed the tech giant's decision to eliminate approximately 650 roles at its Xbox gaming division.

"As part of aligning our post-acquisition team structure and managing our business, we have made the decision to eliminate approximately 650 roles across Microsoft Gaming – mostly corporate and supporting functions – to organize our business for long term success," said Microsoft Gaming CEO Phil Spencer in a memo obtained by CNBC. "With these changes, our corporate and supporting teams and resources are aligned for sustainable future growth, and can better support our studio teams and business units with programs and resources that can scale to meet their needs."

Spencer added that there will be no games, devices or experiences canceled and no studios closed as result of these job cuts.

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This is the third round of layoffs in the Xbox gaming division since Microsoft closed its $69 billion acquisition of Activision Blizzard in October 2023. 

Is Microsoft stock a buy, sell or hold?

Microsoft is up roughly 26% on a total return basis (price change plus dividends) over the past 12 months and Wall Street thinks the Dow Jones stock has more room to run. 

According to S&P Global Market Intelligence, the average analyst target price for MSFT stock is $502.43, representing implied upside of roughly 20% to current levels. Additionally, the consensus recommendation is Strong Buy. 

Financial services firm Argus Research is one of the more bullish outfits on the blue chip stock with a Buy rating and $526 price target.

"Microsoft continues to pursue long-term growth through its artificial intelligence (AI) and cloud investments, and may just hold the premier position in business technology," said Argus Research analyst Joseph Bonner in a July 31 note. "The company is one of just a few with a complete, integrated product set aimed at enterprise efficiency, cloud transformation, collaboration, and business intelligence. It also has a large and loyal customer base, a large cash cushion, and a rock-solid balance sheet."

Argus Research's $526 price target represents implied upside of nearly 25% to current levels.

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