Marck Zuckerberg, head of Meta, the parent company of the social networks Facebook and Instagram and the WhatsApp messaging service, shared his roadmap to restructure the company on Tuesday with workers, which implies a new round of layoffs, 10,000 in various divisions of the company until the end of the year, plus 5,000 vacancies that will remain unfilled, as well as the cancellation of an undetermined number of “non-priority” projects. It is the second massive wave of layoffs in Meta, after the 11,000 announced at the beginning of November (13% of its workforce), and it also occurs in the midst of a banking crisis, with a potential drag on the technology sector. The announcement had a positive reception on Wall Street, where Meta shares were up 4.77% at the opening of the session.
The objectives of the massive adjustment are, in the words of Zuckerberg, “to become a better technology company and improve our financial results in a difficult environment in order to execute our long-term vision.” “This is going to be difficult but there is no way to avoid it,” says the founder and CEO of the technology company.
“The schedule is as follows,” writes Zuckerberg in the message to the staff published this Tuesday. “In the coming months, managers will announce restructuring plans focused on shrinking our organizations (divisions), canceling lower priority projects, and lowering hiring rates.” The cuts go through “further reducing the size of our recruiting team.” Those affected will receive information this Wednesday.
In the technology divisions, “we expect to announce restructuring and layoffs at the end of April, and then in our business groups at the end of May. In a small number of cases, these changes may continue until the end of the year. Our deadlines for international teams will also be different.” The company also plans to review its analysis on the hybrid work mode this summer to further adjust costs and efficiency.
In the communication to the company, Zuckerberg acknowledges that the idea of upcoming organizational changes creates uncertainty and stress, in an already worrying economic environment. “My hope is to make these organic changes as early in the year as possible so that we can get through this period of uncertainty and focus on the critical work ahead,” he writes.
At the beginning of February, Meta reported a net profit of 23,200 million dollars (21,725 million euros) in 2022, which represented a sharp drop of 41% compared to the result registered a year earlier, while its annual income totaled a total of 116,609 million dollars (109,197 million euros), 1.1% less than in 2021, the first annual drop in the company’s turnover.
Looking ahead to this year, Meta CFO Susan Li expressed confidence that total revenue for the first quarter will be in the range of $26-28.5 billion, while total expenses for the full year will be in the range of between 89,000 and 95,000 million dollars (81,609 and 87,110 million euros), compared to the previous valuation, prior to the announcement of new layoffs, of 94,000 to 100,000 million dollars.
The Menlo Park (California) technology company is not the only one in the sector that is tightening its belt, after two years of bonanza driven by telecommuting and a great demand for home entertainment during the pandemic. The big technology companies, known as the Big Five, and the titans of Wall Street have undertaken a series of layoffs to try to weather a situation of high inflation and rising money prices by the Federal Reserve (Fed). The combination of rapid rises in interest rates (eight in a row) and increasingly weak consumer demand have forced companies like Amazon, Disney, Meta and big banks to cut their workforces. The social network Twitter has also announced mass layoffs. In total, technology companies laid off more than 150,000 workers in 2022, according to the monitoring portal layoffs.fyiwhile more adjustments are expected as economic growth slows.
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