Apple Inc. is the latest major technology company to rein in hiring and spending plans, adding to the evidence that even Silicon Valley stalwarts are worried about a recession in the coming
The news sent stocks sliding and increased trepidation surrounding tech earnings season, which goes into full swing this week. It may be difficult for companies to reassure jittery investors. International Business Machines Corp. posted better-than-expected sales growth Monday, only to see its shares slip in late trading.Chief Executive Officer Elon Musk said earlier that layoffs would be necessary in an increasingly shaky economic environment. He clarified in a subsequent interview with Bloomberg that about 10% of salaried employees would lose their jobs over the next three months, though the overall headcount could be higher in a year.
Former pandemic highfliers like Netflix Inc. and Peloton Interactive Inc. also have been laying off workers in recent months. Netflix trimmed a few hundred jobs in June, and Peloton just announced plans to shutter its in-house manufacturing.
Facebook parent Meta Platforms Inc. has cut spending and slowed hiring for some senior-level positions. In April, the company announced plans to slash expenses by $3 billion this year. The idea is to refocus Meta’s product teams on core priorities, like the metaverse and its TikTok clone, Reels.
Meta also halted development on one of its early smartwatch prototypes and repositioned its in-home video device, Portal, to focus more on business customers instead of regular consumers.Last week, Google CEO Sundar Pichai told staff that the company planned to slow hiring for the remainder of 2022 -- a rare move for the internet giant, which typically adds tens of thousands of employees every year. Google will be focusing its hiring on technical and “other critical roles” through this year and the next.
“We need to be more entrepreneurial, working with greater urgency, sharper focus and more hunger than we’ve shown on sunnier days,” he said.
Other companies are looking to wind down ambitious growth plans without the need for major layoffs.
Amazon staffed up during the pandemic so it could handle a surge in e-commerce spending. That’s now left it overstaffed in its warehouses, but the company has said it’s working through that problem with attrition.In some cases, Amazon is subleasing warehouse space and has paused development of facilities meant for office workers, saying it needs more time to determine how much space employees will require for hybrid work.Amazon CEO Andy Jassy said the company made the decision early in the pandemic to err on the side of having too many workers and too much warehouse space -- rather than too little.
“We knew it might mean that we might have more capacity for some short period of time,” he said.
A key question during the latest earnings season is whether demand from consumers has softened. Apple warned in April that the latest quarter would be bumpy, but mostly because of supply-chain challenges.
Those problems are expected to erase as much as $8 billion from Apple’s sales in the quarter. Investors should get a clearer picture of the damage -- and Apple’s outlook for the coming months -- when it reports results on July 28.
— With assistance by Kurt Wagner, Mark Bergen, Matt Day, Edward Ludlow, Dana Hull, and Brody Ford
You must be logged in to post a comment.