Meta cuts 11,000 jobs; Zuckerberg says his investment in Metaverse hasn't paid off

 

Meta is laying off 11,000 employees, about 13% of its workforce, CEO Mark Zuckerberg wrote in a message to employees today. Zuckerberg said his previous decision to spend more didn't pay off the way he thought it would, and that Meta's "revenue outlook is lower than we expected at the beginning of the year."

As of September 30, 2022, Meta had 87,314 employees, an increase of 28% over the previous 12 months.

Zuckerberg wrote: “At the onset of Covid, the world went online rapidly, and a surge in e-commerce led to a massive increase in revenue. Many predict this will be a permanent acceleration that will continue even after the pandemic is over.” I did the same, so I decided to significantly increase my investment. Unfortunately, this didn't pan out the way I expected. Not only did online commerce return to its previous trends, but a downturn in the macro economy, increased competition, and advertising all portended losses leading to Our income was much lower than I expected. I was wrong and I am responsible for it."

The former Facebook company has "cut costs in our business, including shrinking budgets, reducing perks and shrinking our real estate footprint," Zuckerberg wrote. Meta is also "restructuring the team to improve our efficiency" and "reducing discretionary spending and extending our hiring freeze into the first quarter," but "these measures alone won't align our expenses with our revenue growth." Be consistent," he wrote.

Notify employees who have lost their jobs today. "Given the volume of access to sensitive information, we've decided to remove access to most Meta systems for those who are leaving today. But we're keeping email addresses active throughout the day so everyone can say goodbye," Zuckerberg wrote.

Zuck remains committed to the Metaverse

Zuckerberg told employees he remains committed to his Metaverse plans. “In this new environment, we need to be more capital efficient. We have shifted more resources into a small number of high-priority growth areas—such as our AI discovery engine, our advertising and business platform, and our long-term vision for Meta universe," he wrote.

Zuckerberg reportedly met with "hundreds of executives" yesterday about the layoffs. According to the Wall Street Journal, “Mr Zuckerberg appeared frustrated at Tuesday’s meeting and said he was responsible for the company’s missteps and that his over-optimism about growth led to overstaffing, according to people familiar with the matter. "

In the U.S., severance pay for laid-off workers will be 16 weeks of base pay plus two weeks per year from the company. Workers will also receive six months of health insurance and pay for any remaining vacation. In a memo to employees, Zuckerberg said the severance package would be similar in other countries, but there would be "a separate process that takes into account local employment laws."

While layoffs will affect every part of the company, "hiring will be disproportionately impacted as we plan to hire fewer people next year. We are also restructuring our business teams more substantially," Zuckerberg wrote .

In its third-quarter earnings report on Oct. 26, Meta said its revenue was $27.71 billion, down 4% year-over-year — but would have risen 2% if exchange rates held constant. "Total costs and expenses were $22.05 billion, up 19% year-over-year," Meta said. Meta's quarterly net income was $4.4 billion, down from $9.2 billion in the third quarter of 2021.

Meta stock is up more than 7% this morning, but is still down nearly 70% into 2022.