Tech giants are set to report quarterly earnings, starting on Tuesday with Alphabet and Microsoft. Wall Street is expecting good news, including more progress on artificial intelligence.
But the industry has also relied on another strategy to improve financials: layoffs. The cuts aren’t as widespread as last year, when hundreds of thousands of jobs were eliminated. But they’re a reminder that the tech sector is still trying to find its footing after a boom in hiring during the coronavirus pandemic and finding ways to preserve dizzying stock gains.
About 100 companies have cut 25,000 positions this year, according to Layoffs.fyi. By comparison, more than 1,000 companies eliminated about 260,000 last year.
So far this month: Microsoft announced 1,900 cuts in its video game division, including at its recently acquired Activision Blizzard; Google laid off hundreds of employees, including in its engineering ranks and its hardware division; and Amazon said it was laying off hundreds, including 35 percent of the work force at its Twitch unit.
Not all layoffs are the same, The Times notes:
For big tech companies, job cuts have been a way to reduce spending on noncore operations and extract the kind of cost savings that Wall Street loves. Now, those cuts are more targeted: In the case of Meta, that means reducing the number of middle managers at Instagram.
For smaller tech businesses, it’s more a matter of survival. Start-ups have been finding it harder to raise capital as risk-averse venture capitalists keep their wallets closed. In the words of Nabeel Hyatt, a general partner at Spark Capital, these fledgling companies “are just trying to gain runway to survive.”
The cuts will probably continue so long as investors love them. Wall Street has rewarded tech companies that laid off thousands with higher stock prices. Meta’s shares have soared since it embarked on a self-described “year of efficiency” last year that has made it a third slimmer employee-wise. Those cost savings, coupled with a redoubled bet on A.I., has helped push the tech giant’s market value to over $1 trillion.
And venture capitalists have told DealBook that they’re ready to invest in start-ups — but that it helps if those companies have made themselves leaner. That, the investors say, will enable them to operate better in potentially difficult times.
In other layoff news: Some tech workers are filming their layoffs and posting them on social media, in the name of catharsis and transparency.
HERE’S WHAT’S HAPPENING
Boeing withdraws efforts to expedite safety approval for a version of its 737 Max jet. The aircraft manufacturer revoked an application it made last year seeking an exemption from a safety standard for a version of its 737 Max 7. Separately, Boeing received some good news amid its latest crisis: The European airline Ryanair, one of its biggest customers, said it would buy more planes if U.S. carriers dropped their orders.