Meta planning massive layoffs after disappointing results

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    Straits Times, Bloomberg, AFP, NY Times

    7th November 2022 – (New York) Facebook parent Meta will become the latest tech firm to scale back its workforce, with plans to lay off thousands of employees this week, the Wall Street Journal reported on Sunday.

    An announcement was expected as soon as Wednesday, and the job cuts could impact “many thousands” of Meta employees, the newspaper said, citing people familiar with the matter.

    The company has already told employees to cancel non-essential travel from this week, according to the report.

    The job cuts are set to be the most significant at the company since it was founded in 2004, The New York Times reported.

    Meta has been struggling financially for months and has been increasingly clamping down on costs. The Silicon Valley company, which owns Facebook, Instagram, WhatsApp and Messenger, has spent billions of dollars on the emerging technology of the metaverse, an immersive online world, just as the global economy has slowed and inflation has soared.

    At the same time, digital advertising – which forms the bulk of Meta’s revenue – has weakened as advertisers have pulled back, affecting many social media companies. Meta’s business has also been hurt by privacy changes that Apple enacted, which have hampered the ability of many apps to target mobile ads to users.

    Last month, Meta posted a 50 per cent slide in quarterly profits and its second-straight sales decline. The company said at the time that it would be “making significant changes across the board to operate more efficiently”, including by shrinking some teams and by hiring only in areas of highest priority.

    On the news of Meta’s disappointing results, the company’s stock price took a major hit, falling 25 per cent in one day. The company’s market value over the past year is down to US$600 billion.

    Chief executive Mark Zuckerberg in September outlined plans to reorganise teams and reduce headcount for the first time, following a sharp slowdown in growth at Meta. Mr Zuckerberg said then that the company will likely be smaller in 2023 than it was in 2022. 

    As at Sept 30, Meta had more than 87,000 workers worldwide across its different platforms. Its shares have fallen 73 per cent this year, and the job cuts will add to already mounting job losses in Silicon Valley.

    Twitter last week slashed nearly 3,700 positions after Mr Elon Musk completed his US$44 billion (S$62 billion) takeover of the social media platform. Other companies that have also reduced their workforce or announced staff cuts include ride-hailing firm Lyft and hard-drive maker Seagate Technology Holdings.

    On Thursday, Amazon said it decided to pause incremental corporate hiring because the economy was “in an uncertain place”. The move added to a freeze from last month, when the e-commerce giant halted corporate and technology hiring in its retail business for the rest of the year.

    Ad-supported platforms such as Facebook and Alphabet’s Google are also suffering from advertisers’ budget cuts amid inflation concerns and rising interest rates.

    In addition to Meta’s ad-supported business woes, investors have been worried about Mr Zuckerberg’s decision to devote major funds to developing the metaverse.  

    Mr Zuckerberg has been signalling tougher times ahead for months.

    In July, he told employees that the company was facing one of the “worst downturns that we’ve seen in recent history”, and that workers should prepare to do more work with fewer resources. Their performances would also be graded more intensely than previously, he said. 

    “I think some of you might decide that this place isn’t for you, and that self-selection is okay with me,” Mr Zuckerberg told employees in a call at the time. “Realistically, there are probably a bunch of people at the company who shouldn’t be here.”

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