On Tuesday, Zoom announced it would cut 1,300 jobs, or 15% of its workforce, making it the newest tech company to do so as the pandemic-driven rise in demand for digital services starts to slow.
Zoom’s CEO Eric Yuan warned that the layoffs will affect every area of the company in a memo to staff members. Yuan acknowledged that he made “mistakes” in how swiftly the business expanded during the pandemic and added that he and other executives would take a large pay cut.
“The uncertainty of the global economy, and its effect on our customers, means we need to take a hard yet important — look inward to reset ourselves so we can weather the economic environment,” CEO Eric Yuan wrote in a blog post addressed to “Zoomies.”
Yaun added, “As the CEO and founder of Zoom, I am accountable for these mistakes and the actions we take today – and I want to show accountability not just in words but in my own actions,” Yuan wrote. He will cut his salary by 98% and decline his bonus; he said that executive leadership will reduce their pay by 20% and also forfeit their bonuses.”
However, as more employees returned to the workplace last year, Zoom stock experienced a huge fall.
Zoom was a darling stock in the early days of the pandemic as people were working from home and using the companies video platform for conference calls and meetings. It was a prominent way to stay in touch with everyone without having to be in the office.
Meanwhile, as Zoom lays off much of its workforce, they just hired Smita Hashim. They made the announcement on Twitter on Monday, February 6th. “Welcome to our new chief product officer, Smita Hashim! Bringing an impressive background of innovative leadership in the collaboration space and building upon products that continue to be vital to enterprise businesses, we look forward to her contributions at Zoom!”
Zoom’s stock was up on the news at 82.85+5.78 (+7.50%) As of 02:47PM EST.
During the first 24 months of the pandemic, Zoom had five consecutive quarters of triple-digit year-over-year growth, forcing the company to increase its workforce to handle the unexpected rise in demand. Inevitably, that expansion slowed down, but Zoom has continued to grow steadily. The most recent quarterly results report in November showed sales up 5% year over year to $1.1 billion; despite a 9% decline in online revenue, enterprise revenue climbed by 20% to $614.3 million. Zoom also disclosed free cash flow of $272.6 million.
On February 27, Zoom is expected to release financial data for the final quarter of its fiscal 2023. The company predicted a sales growth of about 2.5% year over year for the fourth quarter when it released its third-quarter results. Zoom also regularly earns a profit. Even with the positive outlook the company states, CWEB believes there will be challenging times ahead in 2024 for the stock.
With diminishing consumer demand for Dell’s (DELL) personal computers, the company is cutting approximately 6500 jobs. This is yet another example of recession fears in corporate America. According to reports, the computer behemoth’s PC shipments fell by 37% in Q4 2022 compared to the same period the previous year. PC sales for Dell account for 55% of revenue according to Bloomberg.
In the last few weeks, there have been mass layoff announcements from Meta, Google, Microsoft, and Amazon. Layoffs and hiring cutbacks are not just occurring in the tech sector. Boeing just announced it is outsourcing part of its 2,000 HR and finance positions to India.
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