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Things really are turning brutal for tech workers. We scooped the news today that Cameo laid off a quarter of its workforce, just the latest example of the layoffs spreading through tech. Also today, Business Insider reported that Meta Platforms has instituted a hiring freeze through the end of this year (more on that from us here), while The Information revealed that Netflix is reining in its freewheeling approach to how much it pays people. Both stories follow Amazon’s astonishing revelation last week that it is now overstaffed in its warehouses. Tech labor may be becoming more of a buyer’s market than it has been.
And these examples may be the tip of the iceberg. Growing signs of economic strains—the Fed raised interest rates today by the largest amount in 20 years today—are likely to force more companies in different parts of tech to cut costs. The implications are interesting to contemplate. For one thing, a softer labor market could weaken the hands of employee activists at big tech companies, those workers who in recent years have tried to dictate to their employers the kinds of products they should sell, whom they should sell to and whether they need to work from an office again.
Let’s not overstate things. Competition for the most valued employees isn’t likely to decline, particularly for engineers who remain in short supply. Indeed, as we reported today, Google is making an employee-friendly move by scrapping a twice-a-year performance review system. Still, you can expect attitudes among employees to shift, particularly about the appeal of working for a big company, as they did during the early part of the pandemic.
That shift isn’t necessarily one that CEOs favor, as Meta CEO Mark Zuckerberg pointed out on the company’s recent earnings call. He recalled that early in the pandemic, “we saw the attrition levels go down a lot because people didn’t want to get new jobs, which probably meant that there were people who were staying at the company who didn’t care that much about what we were doing.” In other words, Zuckerberg would prefer dissidents quit rather than hang around, bringing everyone else down by complaining. Still, given how things are going, employees may begin to appreciate their jobs more—even if it means going into the office.
Uber Takes Different Road to Lyft
If Uber had to do one thing when it reported its first quarter results today, it was to demonstrate that it’s not Lyft. The smaller ride-hailing firm’s quarterly report on Tuesday—where it forecast a drop in its profit margin in the second quarter—proved so off-putting to investors that Lyft stock fell 30% today to its lowest point since March 2020.
Uber, for its part, forecast a higher profit in the second quarter than the first—based on the made-up “adjusted Ebitda” measure of profitability both companies use. Other parts of its results looked healthier than Lyft’s as well, including the fact that Uber got close to break-even on a cash basis in the quarter and expects to generate cash for the full year. That would be something—a ride-hailing firm making money!
Parsing Uber’s growth rate in the first quarter is a little tricky thanks to various accounting changes and other items. For instance, while its freight unit appeared to show strong growth, that was almost entirely due to the acquisition of a freight firm late last year. Based on Uber’s volume of bookings, though, ride hailing still hasn’t recovered to pre-pandemic levels. Uber and Lyft are in the same boat on that point, at least.
But if stock performance is any measure, Uber succeeded in differentiating itself. Its stock fell just 4.7%, although given that the overall market was rallying, and Uber stock is trading where it was in May 2020, there’s not much to celebrate.
New York Times Gets Athletic
It’s not only video-streaming services that have to spend a lot to add subscribers. The New York Times Co. revealed today that operating costs could rise as much as 23% in the second quarter, thanks to investments the company is making to enhance its content.
Those investments most obviously include February’s acquisition of digital sports subscription site The Athletic. But even before that, The Times had been ramping up its investments to drive more subscribers, so the forecast increase likely did not shock any investors. What they’ll be monitoring is whether revenue rises to match the increase.
In particular, will The Times get enough of The Athletic subscribers to sign up for pricier offerings to justify the $550 million acquisition? The answer to that question will unfold over the next few quarters, so don’t hold the presses. But we’ll be waiting.
In Other News…
- Twitter may force businesses and government customers to pay to use its service when Elon Musk owns it, the billionaire tweeted Tuesday evening. The social media service would “always be free for casual users,” Musk tweeted, but said there might be a “slight cost” for commercial or governmental use. He didn’t elaborate on what the company might charge.
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Google Overhauls Performance Review System After Employee Criticism
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