Meta lays off 11,000 employees in first major workforce reduction since launch

Meta lays off 11,000 employees in first major workforce reduction since launch

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Meta Platforms Inc. is letting go more than 11,000 employees, or about 13% of its workforce, in what represents the first major round of layoffs at the company since its launch.

Meta Chief Executive Officer Mark Zuckerberg announced the layoffs in a memo released today. The announcement was widely anticipated, with the Wall Street Journal having reported that Zuckerberg informed executives about the move earlier this week. Meta first indicated that it plans to make workforce reductions in October and earlier announced a hiring freeze.

“I want to take accountability for these decisions and for how we got here,” Zuckerberg wrote in today’s memo. “I know this is tough for everyone, and I’m especially sorry to those impacted.”

Zuckerberg stated that employees affected by the layoffs will receive 16 weeks of severance pay as well as an additional two weeks’ pay for every year spent at Meta. The company will also provide stock option vesting on Nov. 15. Affected employees will receive three months of career support services as well. 

In addition to the layoffs, Meta is taking a number of other steps to reduce costs. Zuckerberg detailed that the company is extending a previously announced hiring freeze until the end of next March. In parallel, Meta will consolidate its office footprint and explore opportunities to reduce spending on data center infrastructure.

The company provided additional details about its cost reduction efforts in a regulatory filing published today. According to the filing, Meta expects its 2023 expenses to range between $94 billion and $100 billion, which is lower than the $96 million to $101 billion billion range it provided previously. The company is now forecasting capital expenditures of between $34 billion and $37 billion next year, less than the up to $39 billion it anticipated earlier.

At the same time, Meta plans to continue investing in metaverse initiatives. The metaverse is envisioned as a future version of the internet that would include more augmented reality and virtual reality elements. The technology plays a central role in Meta’s long-term revenue growth plans. 

Meta stated in the regulatory filing that the operating losses of its metaverse unit, Reality Labs, are expected to “grow significantly” in 2023. The Reality Labs unit lost $3.67 billion in the third quarter, about $1 billion more than the same time a year earlier.

The loss incurred by the unit was one of the factors behind Meta’s weaker-than-expected third quarter financial results. The company reported net income of $4.395 billion for the three months through Sept. 30, a significant decline from the $9.19 billion it posted a year earlier. Meta’s third-quarter revenue reached $27.71 billion, which represents a year-over-year decline of 4.5%.

“We’ve shifted more of our resources onto a smaller number of high priority growth areas — like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse,” Zuckerberg stated in today’s memo.

Following the announcement, Meta’s stock was rising more than 6% in midday trading today.

The layoffs at Meta mark the latest in a series of high-profile workforce reduction initiatives announced by tech companies since the start of the week.

Salesforce Inc. on Tuesday confirmed reports that it launched a round of layoffs this week. According to Protocol, the layoffs are expected to affect between 2,000 and 2,500 employees. CNBC cited a source as saying that less than 1,000 workers were affected as of Tuesday.

SADA Systems Inc., a major technology consultancy, is also reducing its headcount. CRN reported today that the company, which helps organizations with tasks such as moving applications to the cloud, laid off 11% of its approximately 950 employees. However, SADA reportedly still has significantly more employees than a year ago thanks to recruiting investments made over the last few quarters.

Image: Meta

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