On Wednesday (9 Nov), tech giant Meta announced that it would lay off more than 11,000 employees, which comprise 13% of its workforce.
The mass firing is the latest in a line of job cuts at other tech companies, such as Twitter and Microsoft.
Chief executive officer Mark Zuckerberg assured the affected employees they would receive a severance package.
CNBC reports that Zuckerberg revealed the mass layoffs in a letter to employees.
He attributed the reason for the layoffs, which would affect 13% or more than 11,000 employees, to a weak advertising market and high inflation.
Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected.
“I got this wrong, and I take responsibility for that,” he added. “I know this is tough for everyone, and I’m especially sorry to those impacted.”
He addressed employees in a short call on the same day as well, which Reuters had access to.
Taking no questions, he mostly repeated what was stated in that morning’s blog post and called the higher investments in e-commerce a “big mistake”.
Zuckerberg also confirmed that he would host another town hall on Friday (11 Nov), during which he would take questions.
Like other tech firms, Meta had aggressively hired during the pandemic due to a spike in social media usage.
At the end of Sep, its workforce comprised more than 87,000 employees, CNBC reports.
However, soaring costs and rapidly rising interest rates have caused advertisers and consumers to decrease their spending, causing a downfall in business.
According to Reuters, employees affected by the layoffs will receive a severance package.
This will entail 16 weeks of base pay, in addition to two more weeks for every year of service. Meta will pay for all remaining time off as well.
The employees will also receive shares, which were set to vest on 15 Nov, and six-month healthcare coverage.
Meta did not disclose to Reuters the exact charge for the layoffs.
However, they said they had included the figure in their 2022 expense outlook, which came up to between S$119.2 billion (US$85 billion) and S$122 billion (US$87 billion).
Meta has lost more than 70% of its value, according to CNN.
In addition, the business lost S$13.23 (US$9.44) billion from Jan to Sep 2022, with losses potentially increase significantly in 2023.
It became the worst performer among big tech companies this year.
On 9 Nov, the company’s shares rose 4% following the news of the layoffs, Reuters stated.
They now expect expenses in 2023 to be at S$131.8 billion (US$94 billion) to S$140.2 billion (US$100 billion), down from a previous projection of S$134.6 billion (US$96 billion) to $141.6 billion (US$101 billion).
The tech giant has also narrowed its capital expenditures forecast range for 2023.
Reuters reports that the mass layoffs would have varying ramifications for different teams across Meta, especially recruiting and business units.
In his message, Zuckerberg confirmed the rollout of more cost-cutting measures, such as the freezing of hiring ventures in the first quarter of 2023 and the reduction of office space.
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Featured image adapted from PetaPixel.
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