Sam Dickie: Fisher Funds expert on Microsoft cutting over 4,000 jobs as a result of AI

Microsoft is cutting 4800 jobs - about two percent of its global workforce - in a sweeping restructure.

Most cuts are part of a restructure of its struggling Xbox gaming division.

It's the latest in a string of mass layoffs by the tech giant alongside major investment in AI.

Sam Dickie from Fisher Funds explained the implications of this move.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:00):
People are weird.

Speaker 2 (00:00):
Ah, so I reckon that some of the weirdest people
are like hardcore fans of celebrities, and in this case,
the hardcore fans of Taylor Swift who have There's an
artist that's gone around about twenty four hours after her
wedding in New York Central, New York, and Pick just
picked up the trash on the ground. People have paid
for little bits of the trash, paid about three forty

(00:21):
three New Zealand dollars about twenty five US dollars, just
random things like a water bottle, cap ring, pop candy
which is like a ring you pull on your finger
and suck, probably because you're high, police caution tape, straws utensils,
one left AirPod, just like maybe in the vain Hope
that I don't know, somebody famous Stephen Colbert touched that

(00:44):
particular straw. People are so strange, you don't know. Might
have been just the bum down the road who touched
that straw, And now you own it and you paid
money for it. More Full view twenty three away from seven. Microsoft,
as we were discussing earlier this week, is just cut
almost five thousand jobs and reckons AI is changing how
work gets done.

Speaker 1 (01:01):
Sam Dickey from Fisher Funds is with us. Hello Sam, Hey, Yeah,
there was.

Speaker 3 (01:05):
Just chuckling about your Tata Swift story there.

Speaker 1 (01:07):
Have you ever paid that ranging that done? No?

Speaker 2 (01:10):
No, I don't think I've Actually I've ripped a poster
off a wall once at a gig. It was Tim
Finn's gig. I was about seventeen years old. That's probably
the dumbest thing I've done.

Speaker 3 (01:20):
He didn't pay for it, though, No.

Speaker 1 (01:22):
That's right.

Speaker 2 (01:22):
I did pay to go to the concert though, so
more for me anyway. Now Microsoft, some people are saying
Microsoft are blaming it on Ai. Is AI really taking
the jobs here?

Speaker 1 (01:31):
Yeah?

Speaker 3 (01:31):
They were adding around ten thousand people a year for
thirteen years and then that flat line last year and
now this headline about four thousand and eight hundred job
cuts does feed that AI taking jobs narrative. But most
of those cuts were in the Xbox division, about eighty
percent of them, which was massively bloated with fourteen fourteen

(01:52):
layers of management. And they've been strugging to gets PlayStation
and Nintendo. And some of this was just overdue indigestion
from the post COVID overhiring that a lot of tech
companies did. The real story, I think is is this
capex cannibalization. So we know that, you know, big techs
being muddying in the waters by spending massive capecks as
we've talked about many times, and they have to fund

(02:13):
it from somewhere that the market's running out of patients
and sadly people are the easiest cost savings. But bigger picture,
I think most long term forecast suggests AI creates more
jobs than it destroys.

Speaker 1 (02:27):
Oh really, how explained to me?

Speaker 3 (02:30):
Well, the type of jobs are AI engineers, machine learning specialist,
data scientists, AI infrastructure engineers. None of those jobs existed,
by the way when I left university, Heather, But there
is chatter about a wage gap developing. So it's sort
of a two tiered wage structure. So the skilled AI
practitioners they command premium salaries while everyone else stagnates, which

(02:53):
is some of the bearers. More barist people are saying
that's inequality on steroids, but I think history shows that education, retraining,
and labor markets adapt quickly, so we will see there.

Speaker 1 (03:04):
So the companies that have automated, are they getting more efficient? Though?

Speaker 3 (03:09):
That's actually super interesting, So AI is definitely making companies
more productive, but the biggest efficiency gains have been proven
to be coming from combining AI with human expertise, not
replacing people entirely. And in fact, Forester and Gartner too
big tech research firms reckon. Many firms regret cutting people
to fund AI because these firms are losing institutional knowledge

(03:32):
that's nearly impossible to rebuild. And in fact, they think
twenty twenty seven will be the crunch year where firms
will be forced to quietly re hire up to half
half of the AI attributed layoffs because operational systems are degrading,
which would be a super painful u turn for management teams.

Speaker 1 (03:50):
Okay, what does this mean for investors?

Speaker 3 (03:52):
Well, remember our chat last week, this bigger picture. This
is not about filling that sorry, this is not about
stealing jobs. This is about filling looming labor shortages. So
three hundred million working age population shrinkage over the next
twenty five years. But I do think the real winners
might be companies that have kept their experience, management teams,
kept their cultures intact, and are improving their performance with AI,

(04:15):
so they'll have institutional knowledge, team morale and the ability
to deploy AI without the chaos of losing key people.

Speaker 2 (04:21):
Yeah, but a very good point that you make, Sam.
Thank you very much appreciated, Sam Dickie for your funds.

Speaker 1 (04:26):
Enjoy your long weekend.

Speaker 3 (04:28):
For more from Hither Duplessy Allen Drive, listen live to
news talks it'd be from four pm weekdays, or follow
the podcast on iHeartRadio.