The contraction comes after demand for cloud computing and collaboration services picked up as enterprises, government agencies and schools encouraged remote work to reduce Covid exposure.Employees in the U.S. who are eligible for benefits will receive severance that's above the market and six months of health care and stock vesting, along with 60 days' notice before their work ends, Nadella wrote.The layoffs are not a major surprise given the deterioration in Microsoft's cloud-infrastructure and Windows operating system sales over the past few quarters, said Gil Luria, an analyst at DA Davidson who has a buy rating on Microsoft stock."I think there's been a broad expectation from all these companies, especially the ones that hired more over the last two to three years, to adapt and react to a slower-growth environment and show the discipline and the focus on shareholder value that investors need to feel right now as they try to ride out a slower-growing economy," Luria said.The culling might save Microsoft around $2.5 billion over the next 12 months, or 14 cents per share when including the charge, analysts at Evercore ISI, who have the equivalent of a buy rating on Microsoft stock, wrote in a note to clients."