This has been a tough year for most companies, but especially for tech companies that have ridden the wave of COVID and now need to downsize staff, enforce hiring freezes, and cut costs to scale their operations. Those affected include companies such as Amazon, Apple, Gopuff, Lyft, Netflix, Stripe, and Twitter.

In an exclusive article, the Wall Street Journal reports that Meta is planning massive technology layoffs this week that will affect “many thousands of employees.” The announcement could come as early as today.

At the end of September, Meta had 87,314 employees, an increase of 28% compared to the third quarter of 2021. At the same time, the company recorded a 4% decrease in revenues and a 19% increase in costs. and expenses. Net income was $ 4.4 billion, a decrease of 52% year-over-year or $ 3.22 of diluted earnings per share, a decrease of 49% year-over-year.

In a press release dated October 26, 2022, the company said, “To provide context on the approach we are taking to define our budget for 2023, we are making significant changes across the board to operate more efficiently. keeping some teams steady in terms of headcount, reducing others and investing headcount growth only in our top priorities. As a result, we expect headcount by the end of 2023 to be approximately in line with Q3 2022 levels. “

That message is inconsistent with large-scale technology layoffs. However, layoffs appear to be imminent. The Journal reports that these are the first major staff reductions to hit Meta since it was founded as Facebook in 2004. The Journal also says this could be the biggest layoff by a large tech company in 2022, when so many companies are laying off staff.

Two days before the earnings results were released, long-term shareholder Altimeter wrote a public letter to Mark Zuckerberg and Meta’s board of directors, asking the company to “get its mojo back.” They specifically recommended three actions to help the company get back on track:

  1. Reduce the workforce by at least 20%.
  2. Reduce annual investments by at least $ 5 billion from $ 30 billion to $ 25 billion.
  3. Limit investments in metaverse / Reality Labs to a maximum of $ 5 billion per year.

Altimeter pointed out that Meta’s number of employees has tripled in the past four years, from 25,000 to 85,000.

“As such, we would like to encourage the company to move aggressively and cut at least 20% of employee-related expenses by January 1, 2023. Why 20%? To put that into perspective, it simply brings the company back to mid-2021 employee spending levels – and I don’t think anyone would argue that Meta didn’t have enough staff in 2021 to tackle a business that looks similar to what it does today, “he said. written Brad Gerstner of Altimeter.

“We don’t take job cuts lightly. These are not numbers on a spreadsheet. They are people with families and children to support. That said, we have a talent shortage in Silicon Valley. Meta and other large companies have made hiring very difficult for start-ups. We are confident that these employees will find replacement jobs and quickly get back to work on important inventions that will advance us all, ”added Gerstner.

Meta stock

On November 8, 2021, Meta shares were valued at $ 338.62 per share. As of 2:12 pm Eastern yesterday, it was down to $ 95.76, a decrease of 71.72% in one year. Meta is dangerously close to the 52-week low of $ 88.09 per share.

Meta stock listing at 2:12 pm Eastern Nov 8, 2022 = $ 95.76 per share, a decline of 71.72% in one year.
Source: Google

Insider Take

Zuckerberg is a smart and ambitious innovator and many would argue that he has done amazing things for technology, the community and the future of communication. Others would say he has his fingers in too many pies. He has tried many different tools, products and services and abandoned them, including paying news publishers for their work and abruptly shutting down the program this fall. Where is Meta headed? It’s hard to say, but changes clearly need to be made. Losing thousands of employees due to technology layoffs, however, will be painful. We hope that Gerstner is right and that the workers involved will find other jobs soon. At the same time, we’d like to learn more about Meta’s plan to get things back on track.

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