Marck Zuckerberg, head of Meta, the parent company of the social networks Facebook and Instagram and the news service WhatsApp, informed the employees on Tuesday of his roadmap for restructuring the company. It includes a new series of layoffs of 10,000 jobs in various areas of the company by the end of the year. Plus 5,000 open positions remaining unfilled and an unspecified number of “non-priority” projects being canceled. This is the second massive layoff at Meta, following the 11,000 (13% of the workforce) announced earlier in November, and it comes amid a banking crisis, with a potential drain on the tech sector. The announcement was received positively on Wall Street, where Meta shares are up 4.77% at the start of the session.
The goals of the massive overhaul, according to Zuckerberg, are to “make the company a better technology company and improve financial results in a challenging environment.” Meta’s founder and CEO says: “We look forward to realizing our long-term vision. It will be difficult, but there is no way around it.”
“The schedule is as follows,” Zuckerberg wrote in a message to employees released Tuesday. “In the coming months, leaders will announce restructuring plans aimed at downsizing our organizations [divisiones], the cancellation of less prioritized projects and the reduction in contract rates”. The cuts go through “further reducing the size of the hiring team.” Those affected will receive information on Wednesday.
Speaking of technology areas, he said: “We expect to announce restructuring and layoffs at the end of April, and then in our businesses at the end of May. In a few cases, these changes may last until the end of the year. Our deadlines for international teams will also be different.” For its part, the company plans to review its hybrid work mode analysis in the summer to further adjust costs and efficiencies.
In the note to the company, Zuckerberg acknowledges that the envisioning of upcoming organizational changes is creating uncertainty and stress in an already worrying economic environment. “My hope is to make these organic changes as early as possible in the year so that we can get through this period of uncertainty and focus on the critical work ahead,” he writes.
Earlier in February, Meta reported net income of $23,200 million for 2022, a sharp 41% decline from last year’s earnings. Meanwhile, annual sales were $116,609 million, down 1.1% from 2021, the company’s first annual sales decline.
Looking ahead this year, Meta’s CFO Susan Li expressed confidence that total revenue for the first quarter would be between $26 billion and $28.5 billion. Total spending for the full year will be between $89,000 and $95,000 million (€81,609 and €87,110 million), compared to the previous estimate of $94,000 to $100,000 million before the announcement of new layoffs.
The Menlo Park, California-based tech company isn’t the only one in the industry tightening its belt after two years of bonanza of teleworking and high demand for home entertainment during the pandemic. The big tech companies known as the Big Five and the titans of Wall Street have taken a series of layoffs to try to weather a situation of high inflation and rising money prices at the hands of the Federal Reserve (Fed). The combination of rapid rate hikes (eight in a row) and increasingly weakening consumer demand have forced companies like Amazon, Disney, Meta and the big banks to lay off their workforces. The social network Twitter has also announced mass layoffs. Overall, tech companies laid off more than 150,000 workers in 2022, according to monitoring portal Layoffs.fyi, while further adjustments are expected as economic growth slows.
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