The Dow Jones Industrial Average (^DJI 0.23%) was down 65 points as of 11 a.m. EDT. Dow Jones component Microsoft (MSFT 0.45%) was one of the few gainers in the index, rising more than 0.8% after announcing a massive round of layoffs. In contrast, shares of other tech stocks were experiencing notable declines: SanDisk (NASDAQ: SNDK) fell more than 12% after reporting earnings, and its guidance appeared to weigh on Micron Technology (MU 5.01%).
Microsoft to slash workforce
Microsoft unveiled an aggressive job-reduction program on Thursday, announcing that it would cut as many as 18,000 jobs. The majority of these jobs will come from its newly acquired Nokia handset division.
Even after the layoffs, Microsoft will still have more than 100,000 employees. The recent addition of Nokia's handset business brought Microsoft's employee count to more than 127,000.
Of the 18,000, about 12,500 will come from Microsoft's Nokia business, which will cut its workforce roughly in half. The rest will come from the larger Microsoft organization, including more than 1,000 jobs in the Seattle area.
Although layoffs were expected, this program is much more aggressive than what was anticipated. Microsoft will take a charge of more than $1 billion on the move, though this should save the company significant money over the long term.
More interesting may be the shift in strategy: Although Nokia isn't going anywhere, its aggressive reduction, paired with CEO Satya Nadella's move away from the "devices and services" mantra of his predecessor, may signal a Microsoft that's less focused on hardware.
SanDisk plunges after earnings disappointment
SanDisk was one of the worst-performing stocks in the market Thursday, with shares dropping 12% after the company reported disappointing quarterly results.
SanDisk actually beat analysts' expectations, posting an adjusted earnings-per-share figure of $1.41 on revenue of $1.63 billion. Analysts had been looking for SanDisk to report earnings per share of around $1.39 on revenue of $1.6 billion.
But that wasn't good enough. SanDisk has experienced rapid growth in recent quarters, with a string of earnings blowouts predicated on the exploding demand for its flash memory products. SanDisk's earnings multiple had been higher than 20 prior to its earnings report, and even after Thursday's decline, it's still greater than that of the broader Dow Jones Industrial Average.
At the same time, SanDisk offered up disappointing quarterly guidance, projecting third-quarter revenue of just $1.68 billion to $1.73 billion; prior to its guidance, analysts had been looking for around $1.74 billion.
Micron falls in sympathy
Shares of Micron Technology dropped more than 3% on Thursday as investors may have been projecting SanDisk's results onto Micron. Like SanDisk, Micron is a major player in the booming flash memory market, with an offering of NAND, DRAM, and solid-state drives.
Yet investors may have been overreacting. Although SanDisk's guidance was disappointing, it wasn't for lack of demand -- rather, the company appeared to be supply-constrained. The same might not hold true for Micron.
Still, the decline is not particularly surprising -- like SanDisk, Micron has been a highflyer in recent quarters, rallying more than 145% in just the last year. Any perceived slowdown in the market could prompt investors to take profits.