The pandemic is finally hitting big tech — two years later 2022/10/25 下午9:04

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The pandemic rubber band is hitting the tech industry.

Microsoft (MSFT) made headlines this week when reports TRENDING

emerged that it slashed nearly 1,000 jobs, making it the latest
RPT-Cadbury-maker Mondelez to invest
tech giant to respond to economic turmoil. 1. $600 mln on sustainable cocoa sourcing

https://finance.yahoo.com/news/the-pandemic-is-finally-hitting-big-tech-two-years-later-203449690.html 第1⾴（共8⾴）
The pandemic is finally hitting big tech — two years later 2022/10/25 下午9:04

The company characterized its layoffs as “structural Biden could have 'Plan B' if court stalls
2. student debt forgiveness — more
adjustments,” stressing that it would keep hiring in “key growth repayment delays

areas.” The cuts still might have surprised some observers. UPDATE 1-Irish deputy PM Varadkar sees
While Microsoft's stock is down 22% over the past 12 months,
3. less 'magical thinking' from UK PM
Sunak
some competitors have fared worse. Amazon is down nearly
Apple announces new clean energy
32%. Salesforce plummeted 47%, and Google is down 28%. 4. investments, asks suppliers to
decarbonize
The recent bad news in the tech industry could be a delayed
Private Dealmaking Set to Rise,
blow from the pandemic. Interest rate hikes, inflation hovering 5. Widening Public Markets Gap
at 40-year highs and sinking demand are hitting tech
companies that have benefited from two years of pandemic-
driven growth that saw valuations for some companies eclipse
the $2 trillion mark.

“As we entered the pandemic, everybody was afraid that there

were going to be these disastrous layoffs and it was going to be
horrible. And there were, very briefly, in a few places…but that
immediately turned around,” TECHnalysis president and chief
analyst Bob O’Donnell told Yahoo Finance.

“In a weird way, it almost feels like now we're getting some of
the impact of the pandemic after the fact,” he added. “I think
people are recognizing they maybe over extended their hiring
when they expected some of the growth that happened during
the pandemic to continue in the tech industry.”

Slowing sales, falling stock prices, and layoffs

While Microsoft is easily the largest tech company to lay off

employees, it’s far from the only one. Netflix (NFLX) cut off
hundreds of employees as subscriber numbers faltered
following the pandemic, and Snap eliminated 20% of its
employees.

IE
Microsoft

Microsoft is laying off workers as it deals with falling PC sales. (AP Photo/Elaine

Thompson, File)

Meta, meanwhile, is slowly pushing workers out the door via

department reorganizations. Google parent Alphabet (GOOG,
GOOGL), for its part, shuttered projects at its Area 120 division

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The pandemic is finally hitting big tech — two years later 2022/10/25 下午9:04

and asked employees to reapply for jobs elsewhere.

Microsoft’s downsizing efforts come as the PC market is

experiencing its worst contraction in years. According to
Gartner, PC shipments slipped 19.5% in Q3 2022. The reason for
the decline? During the pandemic, consumers ran out to stores
in search of PCs for everything from work to entertainment. As
a result, shipments jumped 32% in Q1 2021 to 69.9 million units.
Now that pandemic-powered expansion is rubberbanding back.

The drop in PC sales is hitting chip makers, too. Intel (INTC) is

expected to lay off thousands of workers, with an
announcement likely to take place sometime around its Oct. 27
earnings report. AMD (AMD), Nvidia (NVDA), and Micron (MU)
have all been slammed by a decline in PC sales, too. Nvidia
already froze hiring for the rest of its fiscal 2023.

But Microsoft doesn’t just rely on PC sales. The company’s

cloud business has been a growth juggernaut for years. So why
the layoffs? Falling share prices could be one reason.

“I think there's a sense of internal pressure to deliver better

results for shareholders,” O’Donnell said. “And that means
increasing the profitability, even though they're already making
a lot of money. And I think that's what part of the challenge
that we're seeing now is that the market has reacted in such a
way, And therefore there's more pressure to deliver better
results. And the way you can do that is reduce your costs.”

Other tech companies are looking for ways to cut costs

without eliminating jobs. Apple (AAPL), for instance, is
reducing production of its iPhone 14 Plus, less than two weeks
after the smartphone hit the market, according to The
Information.

Amazon (AMZN), which overextended itself during the

pandemic boom, is looking to cut back on the number of
warehouses it owns. It has shut down a number of projects
including its delivery robot and a product that lets children
video chat with distant family members.

The downturn could be short lived, at least for tech

On Tuesday, Amazon founder Jeff Bezos became the latest

corporate titan to predict an economic downturn could come
in the next few months. But according to BofA Global Research
analyst Wamsi Mohan, such a decline could be short-lived if
the Federal Reserve continues hiking rates.

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The pandemic is finally hitting big tech — two years later 2022/10/25 下午9:04

Jeff Bezos
@JeffBezos · Follow

Yep, the probabilities in this economy tell you to batten

down the hatches.

CNBC @CNBC
Goldman Sachs CEO David Solomon says there is a good chance
of a recession. Watch the video to learn more. cnb.cx/3VA6t5N

7:40 AM · Oct 19, 2022

7.4K Reply Share

Read 1.5K replies

“If we go into a protracted downturn where inflation is

persistently out of control, and we go into an economic
slowdown or recession, where both of those are paired
together, absolutely, there will be rationalization of jobs,”
Mohan told Yahoo Finance.

“But if we’re getting to the peak of rates somewhat quickly

because the Fed is trying to do this in an accelerated way, we
might end up in the first half of next year moving through most
of the job cuts that are needed for companies to get back on
the operating profit trajectory.”

This week brought a sign that tech’s downturn might be

fleeting. On Tuesday, Netflix reported better than expected
quarterly results, beating earnings and revenue expectations
and adding 2.4 million subscribers, after it had reported
declines every quarter earlier this year.

Netflix was one of the first big tech companies to lose its
pandemic sheen, with subscribers sinking after millions signed
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