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Exclusive-Meta slashes hiring plans, girds for 'fierce' headwinds

Stock Markets Jul 01, 2022 07:36AM ET
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2/2 © Reuters. FILE PHOTO: A smartphone with Facebook's logo is seen with new rebrand logo Meta in this illustration taken October 28, 2021. REUTERS/Dado Ruvic/Illustration/File Photo 2/2

By Katie Paul

(Reuters) -Facebook-owner Meta Platforms Inc has cut plans to hire engineers by at least 30% this year, CEO Mark Zuckerberg told employees on Thursday, as he warned them to brace for a deep economic downturn.

"If I had to bet, I'd say that this might be one of the worst downturns that we've seen in recent history," Zuckerberg told workers in a weekly employee Q&A session, audio of which was heard by Reuters.

Meta has reduced its target for hiring engineers in 2022 to around 6,000-7,000, down from an initial plan to hire about 10,000 new engineers, Zuckerberg said.

Meta confirmed hiring pauses in broad terms last month, but exact figures have not previously been reported.

In addition to reducing hiring, he said, the company was leaving certain positions unfilled in response to attrition and "turning up the heat" on performance management to weed out staffers unable to meet more aggressive goals.

"Realistically, there are probably a bunch of people at the company who shouldn't be here," Zuckerberg said.

"Part of my hope by raising expectations and having more aggressive goals, and just kind of turning up the heat a little bit, is that I think some of you might decide that this place isn't for you, and that self-selection is OK with me," he said.

The social media and technology company is bracing for a leaner second half of the year, as it copes with macroeconomic pressures and data privacy hits to its ads business, according to an internal memo seen by Reuters on Thursday.

The company must "prioritize more ruthlessly" and "operate leaner, meaner, better executing teams," Chief Product Officer Chris Cox wrote in the memo, which appeared on the company's internal discussion forum Workplace before the Q&A.

"I have to underscore that we are in serious times here and the headwinds are fierce. We need to execute flawlessly in an environment of slower growth, where teams should not expect vast influxes of new engineers and budgets," Cox wrote.

The memo was "intended to build on what we've already said publicly in earnings about the challenges we face and the opportunities we have, where we're putting more of our energy toward addressing," a Meta spokesperson said in a statement.

The guidance is the latest rough forecast to come from Meta executives, who already moved to trim costs across much of the company this year in the face of slowing ad sales and user growth.

Tech companies across the board have scaled back their ambitions in anticipation of a possible U.S. recession, although the slide in stock price at Meta has been more severe than at competitors Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOGL).

The world's biggest social media company lost about half its market value this year, after Meta reported that daily active users on its flagship Facebook (NASDAQ:META) app had experienced a quarterly decline for the first time.

Its austerity drive comes at a tricky time, coinciding with two major strategic pivots: one aimed at re-fashioning its social media products around "discovery" to beat back competition from short-video app TikTok, the other an expensive long-term bet on augmented and virtual reality technology.

In his memo, Cox said Meta would need to increase fivefold the number of graphic processing units (GPUs) in its data centers by the end of the year to support the "discovery" push, which requires extra computing power for artificial intelligence to surface popular posts from across Facebook and Instagram in users' feeds.

Interest in Meta's TikTok-style short video product Reels was growing quickly, said Cox, with users doubling the amount of time they were spending on Reels year over year, both in the United States and globally.

Some 80% of the growth since March came from Facebook, he added.

That user engagement with Reels could provide a key route to bolster the bottom line, making it important to boost ads in Reels "as quickly as possible," he added.

Chief Executive Mark Zuckerberg told investors in April that executives viewed Reels as "a major part of the discovery engine vision," but at the time described the short video shift as a "short-term headwind" that would increase revenue gradually as advertisers became more comfortable with the format.

Cox said Meta also saw possibilities for revenue growth in business messaging and in-app shopping tools, the latter of which, he added, could "mitigate signal loss" created by Apple-led privacy changes.

He said the company's hardware division was "laser-focused" on successfully launching its mixed-reality headset, code-named "Cambria," in the second half of the year.

Exclusive-Meta slashes hiring plans, girds for 'fierce' headwinds
 

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Comments (5)
Chinsect Stomper
Chinsect Stomper Jul 01, 2022 9:00AM ET
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Zuck spent 419 million of his own money to create this mess, I hope his company fails.
Clinton Wanjala
Clinton Wanjala Jun 30, 2022 4:56PM ET
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Meta is going down the drain and there's nothing to do about it
Brad Albright
Brad Albright Jun 30, 2022 4:56PM ET
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Let us hope!
Ronald Warren
Ronald Warren Jun 30, 2022 4:46PM ET
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Facebook is all about vein, self absorbed users. You guys are right. Virtual reality is out in left field. Entirely a different concept.
John Laurens
John Laurens Jun 30, 2022 4:35PM ET
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because fecesbook blows, and NOONE in their right mind wants to live with a huge headache causing "meta" goggle on their head. They're a complete joke ran by a complete joke.
Drupal Grupal
Drupal Grupal Jun 30, 2022 4:20PM ET
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drop the focus on meta aka virtual reality
 
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