META, GOOG, MSFT Layoffs: A Glimmer for Q2 Earnings ?
Jobs Cut Still In Motion.
The tech industry's layoffs have not stopped.
After starting in 2023, many companies like Google, Microsoft, Meta Platforms and Amazon, among others are still cutting jobs in 2024.
Recently Microsoft laid off a bunch of people in product and program management roles, impacting multiple teams and geographies.
Notably, despite these cuts, major tech companies keep releasing new artificial intelligence (AI) features and products.
CEOs Explained.
(1) $Meta Platforms, Inc.(META)$.
Meta's move towards "year of efficiency".
Parent company of Facebook, Instagram and WhatsApp is among the first tech giants that announced job cuts.
On the first round of industry-wide layoffs, CEO Mark Zuckerberg has said in February 2024:
The company over hired during the pandemic.
Subsequently, it realized the benefits of a leaner workforce, leading to more layoffs.
The layoff was really tough.
Meta has parted with a lot of talented people, it cared about.
The leaner vision is the right path because by becoming leaner, Meta became more effective.
In 2023, thousands were laid off during Zuckerberg's "Year of efficiency".
(2) $Alphabet(GOOG)$.
As for Google, CEO Sundar Pichai attributed the cut to "different economic reality".
For Google there are multiple reasons, and also conducted multiple rounds of layoffs, with the most recent being in its Cloud unit at the end of May 2024.
Looking back, Google experienced "dramatic growth" during the pandemic, leading to hiring "for a different economic reality" than what was 2023.
To right a wrong, Google laid off thousands throughout 2023, beginning with a 6% reduction of its global workforce (about 12,000 people) in January 2023.
On 10 Jan 2024, Google laid off hundreds of workers in its central engineering division and members of its hardware teams — including those working on its voice-activated assistant.
Then in May 2024, Pichai told Bloomberg that the company is removing some teams completely to "improve velocity".
He pointed out that the first half of 2024 will see more job cuts, which will be at a slower pace in the second half.
Besides layoff, Google is also "reallocating” people to its "highest priorities" which include:
AI projects, like the creation of ARM-based CPUs development.
Implementation of Gemini across Google and Google Workspace apps.
(3) $Microsoft(MSFT)$.
Google isn’t the only one to restructure its workforce to make room for AI.
Its AI rival Microsoft also has "blamed" the new technology for job cuts.
Job Cuts at Microsoft is mainly for restructuring and investments in key areas.
In 2023 memo, Microsoft CEO Satya Nadella explained why the company let some staff go.
Below were the reasons:
People are spending less on digital stuff: During the pandemic, everyone rushed to buy new computers, software, etc. Now, they're being more careful with their money and trying to get the most out of what they already have.
Big changes in computers are coming: New technology — Artificial Intelligence (AI) is getting really powerful. Microsoft is working on this new tech and needs to focus its resources there.
The CEO said they'll still hire new people, but only for these very important areas.
According to the latest reports, the Microsoft layoffs included workers in its product and program management departments.
This comes after the end of the company’s fiscal year on 30 Jun 2024.
It makes sense that Microsoft would enter a new fiscal year with layoffs.
This is normal for the company as it works to “prioritize and invest in strategic growth areas for company’s future and in support of their customers and partners.” (see above)
It’s still unclear exactly how many employees Microsoft cut in this latest round of layoffs.
The latest layoffs aren’t the first job cuts announced this year.
The company cut 1,000 jobs last month (June) and laid off nearly 2,000 workers in January.
Rumours have estimated 1,000 jobs affected across its cloud-based Azure teams, as well as those working on the company's HoloLens 2 mixed reality headsets.
Sentiments and Statistics.
ResumeBuilder talked to about 900 leaders at organizations with more than 10 employees.
Half of those surveyed cited concerns about a recession as a reason.
Nearly 40% of business leaders surveyed by ResumeBuilder think layoffs are likely at their companies this year, and about half say their companies will implement a hiring freeze.
In case readers get away with the idea that jobs cut centred around IT companies, the assumption could not have been further from the truth.
Financial institutions are not spared either.
$Citigroup(C)$ will cut 20,000 from its staff as part of its corporate overhaul.
The layoffs announced in January 2024, are part of a larger Citigroup initiative to restructure the business and could leave the company with a remaining head count of 180,000, excluding its Mexico operations.
In an earnings call that month, the bank said that layoffs could save the company up to $2.5 billion after it suffered a "very disappointing" final quarter in 2023.
$Morgan Stanley(MS)$ is trimming its wealth management division by hundreds of staffers.
Morgan Stanley is laying off several hundred employees in its wealth-management division, the Wall Street Journal reported in February 2024, representing roughly 1.0% of the team.
The wealth-management division has seen some slowdown in recent months, with net new assets down by about -8% from a year ago.
The layoffs mark the first major move by newly-installed CEO Ted Pick, who took the reins from James Gorman on 01 Jan 2024.
My viewpoints: (mine only!)
Age Old practise.
Distilling all the reasons offered by the many CEOs, its just “hired and fired” policy being practised that’s all - no more, no less.
During the pandemic, when the working conditions are challenging - hire more to ease off the workload.
Now that life is almost back to normalcy, its time to trim the fats to keep the company, a lean, mean fighting machine.
It has always been like that but with the advance of AI, in a few years time, jobs that could be managed by AI-apps or AI-robots will not require replacement.
Tighten the belt when biz slows.
I believe with data intelligence, most CEOs would know for the coming few quarters what the numbers will be (derived from data analytics).
For a weakening business, it “pays” to trim the excesses in anticipation. When the time to report earnings come, the fallen business would have been mitigated by a reduction in expenses.
Hopefully the books still looks “ok” after all the checks and balances put in placed, work their magic.
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CPI comes in lower but my goodness the damage has already been done for these stocks.
looking forward to the tech giants’ earnings
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