From The Great Resignation To Great Layoff, Recession Brings Tech Shocks
Gregor Horvat | Oct 06, 2022 03:54AM ET
Unfortunately, large companies have begun to accelerate layoffs or freeze hiring because their forecasts about huge valuations went up in smoke. Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOGL), and Facebook (NASDAQ:META) are examples.
Waiting for a global recession caused by the Central Banks’ raising the cost of money to reduce inflationary pressures, Big Tech companies are firing people as a growth sector requires a lot of money. According to reports, the number of people lost their jobs is more than 80,000.
Meta (Facebook): After its biggest drop since 2004, it aims to reduce the staff by 10%. Some departments will be eliminated. Still, the company will handle the issue by allowing applications for other positions within the company, letting them stay for 30 days before expiration, and finally firing.
Also, as the Wall Street Journal wrote, the department at risk is the human resource team. Although in the past, the policy was to fire underperforming employees, now the tactic is for high-performing employees with a less critical role to be fired.
Similarly, Google gave 60 days to employees to find a new role internally. Upper management cares about the increased productivity and demands from its employees to be more entrepreneurial due to this challenging economic environment. Therefore, it keeps its talent in its ranks, even in a different role.
Amazon confronted an issue of slowing growth in the retail business, so cutting costs was the only quick solution. Additional 99,000 employees were fired during the second quarter of 2022. Despite the explosive growth during the Pandemic due to the increased online sales, after the first months of 2022, e-commerce declined lower than the dot.com crash in 2001. Moreover, the company will cancel the opening of new facilities.
Apple (NASDAQ:AAPL), after announcing that the company is not increasing the production of the iPhone 14 due to reduced demand, its capitalization dropped to $2,27 trillion in September.
Nevertheless, it remains first in the ranking of Big Tech global companies. Microsoft (NASDAQ:MSFT) is third on the list having $1,77 trillion, and Mark Zuckerberg's Meta Platforms dropped out of the top 10.
The bear market trend remains, and the technology giants listed on the NASDAQ struggle with shrinking profits despite a short-term rally of two days. The question on investors' minds is, what is a company growing at 30% and making no money worth?
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