The impact of weakening global economic conditions has been felt in various technology companies, especially since most of their businesses took off at the start of the pandemic.
For example, the five largest technology companies in the US, all of which are expected to record large profit declines during the October-December 2022 period, will make various adjustments within their companies.
The 5 companies are Meta, Amazon, Apple, Alphabet and Microsoft. Of these, Meta and Amazon are expected to post the biggest declines, we were quoted as saying by Reuters, Thursday (19/1/2023).
Analysts have lowered their projected total revenue for the 5 companies, by up to 5% for the October to January period.
"I expect no good news for a while, at least for the next three quarters. I also expect more layoffs to occur," said Siddharth Singhai, chief investment officer at investment firm Ironhold Capital.
For example Amazon, a company made by Jeff Bezos, whose revenue is estimated to have fallen by 38% and its revenue growth is estimated to be the slowest in the last 22 years. They have already started announcing that they will layoffs, the number of which is estimated to reach 18 thousand people.
These layoffs were made because Amazon recruited too many new employees due to the high demand at the start of the pandemic. Just like Meta, which recruited a lot of new employees because the use of social media skyrocketed when many people were working from home at the start of the pandemic.
In November 2022, Meta decided to lay off 11 thousand employees and their Q4 2022 profit is expected to fall 42%, which has fallen for five consecutive quarters. Revenue is also expected to fall 7%.
The 5 largest technology companies increased their headcount by 45% during 2020 and 20.5% in 2021, Apple is the company that added the least number of employees.
"We're expecting an additional 5%-10% layoffs in the tech sector as a lot of these companies are cashing out like the rockstars of the 1980s," said Wedbush analyst Dan Ives.
The latest news is that Microsoft will lay off 10,000 employees in stages until March 2023. The financial condition of the company from Redmond, USA, is not going well. Revenue is expected to only grow 2.4%, the lowest in the last 24 quarters, while profit is predicted to fall 9%.
Meanwhile, Apple's earnings are expected to decline for the first time in the last 15 quarters. Especially after Foxconn, its iPhone assembly partner, experienced big problems at the iPhone factory in China due to lockdown problems.