Tech giants continue to cut jobs due to falling profits
2023.01.18 15:31
Tech giants continue to cut jobs due to falling profits
By Ray Johnson
Budrigannews.com – Analysts predicted that major U.S. technology companies would reverse their pandemic-era excesses in order to boost margins and placate investor concerns at a time when sales growth was slowing.
However, as they attempt to rebalance in a high-interest environment, each of the five largest tech companies in the United States is expected to report a decline in profits between October and December. Meta Platforms Inc., owner of Facebook (NASDAQ:) likewise Amazon.com Inc. are anticipated to experience the greatest declines.
The five companies Meta, Amazon, Apple Inc. (NASDAQ:), and have seen their total revenue projections reduced by analysts. NASDAQ: Alphabet Microsoft Corporation and Inc. (NASDAQ:) from October, it increased by 5% to $561.4 billion in January.
According to FactSet data, the information technology sector is anticipated to report an earnings decline of 9.5%, with big tech companies expected to be among the largest drags on the eleven sectors.
“At least for the next three quarters, I wouldn’t expect good news. Siddharth Singhai, chief investment officer at Ironhold Capital, stated, “I would expect more layoffs.”
On Wednesday, Amazon began informing employees whether they would be laid off as part of its decision to eliminate 18,000 jobs. The company is anticipated to report earnings that fell 38% and revenue that grew at the slowest rate in over 22 years.
The retailer overhired in response to pandemic demand, mirroring Meta’s aggressive hiring strategy to meet an increase in social media use by consumers stranded at home. This led to the workforce reduction.
Meta, which made the decision in November to lay off 11,000 employees, may experience a 42% drop in profit, its fifth consecutive quarter of decline. Additionally, the company’s revenue is likely to decrease by 7%, its lowest level ever.
Apple hired the fewest people among the five companies, with an average increase of 45% in 2020 and 20% in 2021.
Wedbush analyst Dan Ives stated, “We are forecasting another 5% to 10% headcount cut across the tech sector as many of these companies were spending money like 1980s rockstars.”
Microsoft announced on Wednesday that 10,000 roles would be eliminated, affecting less than 5 percent of its workforce. The company’s revenue is expected to rise by 2.4%, the slowest rate in about 24 quarters, according to analysts. The expected decline in profit is 9%.
Apple’s major supplier Foxconn was severely disrupted at the largest iPhone factory in China as a result of worker unrest related to COVID curbs. As a result, Apple’s revenue is expected to fall for the first time in 15 quarters.
It is anticipated that Alphabet’s revenue growth will be the slowest in ten quarters as the company slows hiring and makes “course corrections” to cut costs.
Analysts predicted that these businesses could invest money in buybacks this year to support stock prices. Compared to the nearly 20% decline experienced by the overall market, their shares fell between 26% and over 60% last year.
At the end of the September quarter, Amazon had the most cash and cash equivalents, while Meta had the least, totaling over $110 billion.
