Meta to lay off 13% of workforce after 71% drop in stock price 

Written on 11/10/2022
Editor BizNews

Meta CEO Mark Zuckerberg said the company will cut more than 11,000 jobs, calling himself responsible for the first layoffs in the company's history.

Meta, the parent company of Facebook, Instagram and Whatsapp, is laying off 11,000 of its employees, equivalent to around 13% of the company’s overall workforce. This came after aggressive pandemic-driven hiring sprees which were frozen in May this year when the market began to slow. The tech giant is cutting costs after disappointing results due to decreased spending on online advertising, a core part of Meta’s business. There has also been criticism focused on Zuckerberg’s prioritising virtual and augmented reality, with the CEO allocating billions of dollars to the technology which will likely only be applicable to the mass consumer market in a few years. More in this article from Bloomberg. – Ross Sinclair 

Meta to cut 11,000 jobs; Zuckerberg says ‘I got this wrong’

By Alex Barinka

(Bloomberg) – Meta Platforms Inc. Chief Executive Officer Mark Zuckerberg said the company will cut more than 11,000 jobs, calling himself responsible for the first major round of layoffs in the social media giant’s history.

The reductions, equal to about 13% of the workforce, were disclosed Wednesday in a statement. Zuckerberg then addressed employees, asking them to thank those who lost their jobs, and noting that employees outside North America will face uncertainty while the company sorts out who is affected, according to people familiar with the matter. 

The company, which owns Facebook and Instagram, will also extend its hiring freeze through the first quarter. 

“I want to take accountability for these decisions and for how we got here,” Zuckerberg said in the statement that was sent to Meta employees and posted on the company’s website. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

Zuckerberg said that while reductions will happen across the company, the recruiting team will be disproportionately affected and business teams would be restructured “more substantially.” Meta will also reduce its real estate footprint, review infrastructure spending and transition some employees to desk sharing, with more cost-cutting announcements expected in the coming months. 

Meta told employees that decisions about who would be impacted were made “at the highest leadership levels” and that direct managers weren’t involved in the eliminations, according to a message to remaining employees viewed by Bloomberg. Managers found out which of their reports were to be fired Wednesday morning, the message said.

A Meta spokesman declined to comment on the message.

Meta, whose stock had plunged 71% this year through Tuesday, is taking steps to pare costs following several quarters of disappointing earnings and a slide in revenue. The retrenchment, the company’s most drastic since the founding of Facebook in 2004, reflects a sharp slowdown in the digital advertising market, an economy wobbling on the brink of recession and Zuckerberg’s multibillion-dollar investment in a speculative virtual-reality push called the metaverse.

The shares rose 5.8% at 3:18 p.m. in New York on Wednesday.

Zuckerberg said in the statement that he’d anticipated that the surge in e-commerce and web traffic from the beginning of the Covid-19 lockdowns would be part of a permanent acceleration. “But the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than expected. I got this wrong.” 

Meta is joining a spate of technology companies that have announced job cuts in recent weeks or said they planned to pause hiring. Corporate software maker Salesforce Inc. on Tuesday said it cut hundreds of workers from sales teams, while Apple Inc., Amazon.com Inc. and Alphabet Inc. have all slowed or paused hiring. Snap Inc., parent of rival app Snapchat, is also scaling back, saying in August that it would eliminate 20% of its workforce. 

In a particularly chaotic round of dismissals, Twitter cut roughly half of its workforce last week with many employees finding out they’d lost their jobs when they were suddenly cut off from Slack or email. 

At Meta, employees will continue to have access to their emails so that they can say goodbye to colleagues, though they’ve been cut off from more sensitive corporate systems, Zuckerberg said. US workers who were cut will also get 16 weeks of their base salary as severance, plus two weeks for every year they worked at the company. The company is also offering six months of health-care coverage as well as career services and immigration support. Packages will be similar outside the US, in keeping with local employment laws, the company said. 

Zuckerberg had warned employees in late September that Meta intended to slash expenses and restructure teams to adapt to a changing market. The Menlo Park, California-based company, which also owns Messenger and WhatsApp, implemented a hiring freeze, and the CEO said at the time that Meta expected headcount to be smaller in 2023 than it is this year.

“This is obviously a different mode than we’re used to operating in,” Zuckerberg said in a Q&A session with employees in September. “For the first 18 years of the company, we basically grew quickly basically every year, and then more recently our revenue has been flat to slightly down for the first time. So we have to adjust.”

Read More: Twitter’s Big Debt Bills Add Urgency to Musk’s Turnaround Plans

Even with the cuts, Meta continues to expect that losses in the Reality Labs division, which houses the metaverse investments, will grow “significantly” year-over-year in 2023, the company said in a separate regulatory filing on Wednesday. Meta’s costs have been under heightened scrutiny after reporting spending last month that exceeded the average analyst expectation. The company lowered its total expense projection for next year to $94 billion to $100 billion, straddling the $96.9 billion analyst average.

Zuckerberg has been asking investors for patience as he pours billions into his vision for the next big computing platform after mobile phones: the metaverse, a collection of digital worlds accessed through virtual and augmented-reality devices. The effort requires intensive investment in hardware and research that may not pay off for many years from now.

Meanwhile, growth at the flagship Facebook social network is stagnating. The company is working to accelerate it, and continue to add users to photo-sharing app Instagram, by experimenting with a more interest-based algorithm and short-form videos called Reels.

Now, Zuckerberg has to pull off his major corporate transitions with fewer people.(Updates with internal memo in sixth paragraph.)

–With assistance from Nate Lanxon and Kurt Wagner.

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