The Facebook founder expanded the company into a group with 83,500 employees.
(Photo: REUTERS)
san francisco In a speech to the workforce, Facebook founder Mark Zuckerberg announced a savings program with job cuts, according to media reports. “I had hoped that the economy had stabilized more clearly in the meantime. But from what we’re seeing, that doesn’t seem to be the case yet, so we want to plan a bit conservatively,” Bloomberg news agency quoted as saying from the meeting.
The Facebook group Meta has therefore stopped new hires, the Handelsblatt learned from group circles. There was no immediate response from the company.
The austerity course is a completely new situation for Facebook: since it was founded in 2004, the company had continuously increased its workforce. Since 2019 alone, more than 10,000 additional jobs have been created every year. As of June 30, 2022, Meta employed more than 83,500 people. In the second quarter of this year alone, 5,700 employees were added.
Now a new era seems to be beginning for the company. “During the first 18 years of the company’s existence, we grew rapidly practically every year. Recently, for the first time, our earnings have been flat or slightly down,” Zuckerberg said, according to Bloomberg. The company will be “slightly smaller” in 2023.
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At the end of last year, Meta announced the creation of 10,000 new jobs in Europe alone. It initially remained unclear how many of these positions had been filled so far and whether these could also be affected by cuts.
On the stock exchange, the share price fell after the news became known and was temporarily down more than three percent. Since the beginning of the year, Meta has lost more than 60 percent of its market value and is at its lowest level since the beginning of 2019.
Meta pays a median of $292,785 in salary
Analysts are now trying to predict the extent of the austerity drive. In one scenario, Morgan Stanley’s Brian Nowak reckons Meta could save anywhere from $3 billion to $8 billion in costs in fiscal 2023. He estimates the share price target at $225, on Thursday the paper was around $136.
The Meta Group is one of the employers in Silicon Valley that pays the highest salaries. A law in the USA – the so-called Dodd-Frank Act – obliges large, listed companies to disclose the mean value of the company’s compensation. This was $292,785 for Meta in fiscal 2021.
For comparison: The median reported by Google in 2021 was $295,884. Twitter was valued at $232,626. The value of the chip company Nvidia was $ 217,542.
Despite a more difficult market environment, Meta is highly profitable. For the past quarter, the company reported net income of $6.7 billion on sales of $29 billion. However, the second quarter of the previous year went much better. At that time, net income was $10.3 billion on sales of around $29 billion.
42,000 US tech workers laid off
Over the past few months, a number of technology companies in Silicon Valley have announced layoffs, including well-known companies such as the streaming service Netflix, the broker Robin Hood and the contract specialist DocuSign. According to surveys by industry service Crunchbase, more than 42,000 jobs have been lost in the US technology industry since the beginning of the year.
Nevertheless, the shortage of skilled workers in the industry remains a problem. The job agency Hirect launched a program in May to specifically help laid-off specialists to find a new job. It often only takes a few days to receive a new job offer, according to the platform.
In addition, unemployment in the USA is low. In many areas there are still problems finding staff at all. The unemployment rate was 3.7 percent in August, according to the US Department of Labor. According to the ministry, the number of unemployed rose by 344,000 to six million.
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