The layoff axe swinging at Salesforce may be yet another sign that Big Tech still remains too bloated after years of aggressive hiring into a potential sharp 2023 economic slowdown.
“I think we will see more layoffs,” Independent Wealth Solutions Management portfolio manager Paul Meeks said on Yahoo Finance Live (video above), adding that “these companies have probably gotten fat over the years, so I expect continued trimming.”
Salesforce said it would slash 10% of its workforce and execute select real estate exits and office space reductions. The company declined to comment to Yahoo Finance on what real estate it would be exiting or offices it would be reducing.
The company estimates it will incur $1.4 billion to $2.1 billion in charges related to the actions.
“I’ve been thinking a lot about how we came to this moment,” Salesforce co-founder and CEO Marc Benioff said in a letter to employees. “As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that.”
Benioff’s tech peers have also found that come-to-Jesus moment on costs in recent months as investors press for better margins with sales growth cooling and stock prices languishing.
Snap canned 20% of its workforce in August, and Robinhood cut ties with 23% of its employee base the same month. In November, Meta and Amazon unveiled combined job cuts of 21,000 following soft third quarters. Twitter CEO Elon Musk moved swiftly to cut 3,700 Twitter employees in November upon the closure of his deal for the social media platform.
Meeks estimates the tech industry cut a jaw-dropping 300,000 jobs in 2022 alone.
The longtime tech analyst says the layoffs are setting the groundwork for improved profits for the industry coming out of the economic malaise.
“[The layoffs] are unfortunate for those employees but good for investors,” Meeks added.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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