The Facebook group feels the reluctance of advertisers who pay more attention to their money.
(Photo: Reuters)
Austin, Dusseldorf Meta boss Mark Zuckerberg has proclaimed 2023 the “Year of Efficiency” – and that means more job cuts. The Internet company with its brands Facebook, Instagram and WhatsApp will cut 10,000 jobs and not fill 5,000 vacancies, the Meta founder and boss announced on Tuesday. The company did not say how many of the approximately 400 employees in Germany are affected by the job cuts.
Meta had already announced the layoff of 11,000 employees in November. Almost a quarter of the 87,000 employees at that time had to go. Meta wants to reduce the total costs for 2023 by three billion dollars compared to previous plans.
According to his own statement, Zuckerberg also wants to simplify the organizational structure with the cut. This increases the willingness to take risks in the company, while the reaction time decreases. However, the “flatter structure” also has disadvantages, said the Meta CEO. Individual employees would be managed less carefully and directly, so managers shouldn’t have teams of more than ten members.
Meta stock is up more than 6 percent
Zuckerberg wants to stop overlapping projects and those with low priority. Analysts mainly expect projects from the Reality Labs division, which develops Metaverse applications, to be canceled. Last year alone, the division posted an operating loss of a good $13.7 billion.
Investors welcomed the move. Shares are up more than 6 percent in early trading Tuesday, up more than 50 percent year-to-date, thanks in part to a $40 billion share buyback the company announced. “We applaud the company’s efforts to increase efficiency during uncertain economic times,” said James Lee, analyst at Mizuho.
Meta hired massively during the corona pandemic, when online advertising was booming. Last year, however, the business grew much more slowly than before, explained Zuckerberg – because of the poorer economic situation and competitive pressure. You have to be prepared for the fact that this will remain the case for “many years”.
Zuckerberg blamed higher interest rates, geopolitical instability and more government regulation.
Analyst on Facebook group Meta: “The company’s morale will suffer”
However, the second large wave of layoffs within a few months shows how wrongly the meta management assessed the business situation. Ideally, Zuckerberg would have reduced the workforce in one fell swoop. “Corporate morale will suffer,” said Brad Erickson, an analyst at RBC Capital.
The company has recently posted three consecutive quarters of declining sales. At the end of the year, revenue fell four percent to $32.2 billion and operating profit almost halved to $6.4 billion.
According to Meta, other online giants such as Amazon, Google and Microsoft have also cut thousands of jobs in recent months – after hiring new employees on a large scale during the boom for their business in the corona pandemic. The Facebook group is now the first of them to herald a second major round of layoffs.
More: Meta scraps NFT features on Facebook and Instagram